Agriculture

Sintal [SNPS GR, BUY] has harvested 282.6 thsd tonnes of crops, which is 17% less than in 2009. In particular, the Company harvested 119.2 thsd tonnes of wheat (down 47% YoY), 13.8 thsd tonnes of barley (2.4 times less than in 2009), and 35.8 thsd tonnes of corn (6% YoY lower). In turn, the Company increased sugar beet harvest by 2.8 times – up to 46.6 thsd tonnes; sunflower by 3.7 times – up to 36.0 thsd tonnes; and corn by 31% – to 35.8 thsd tonnes. This result was caused by a decrease in crop yields due to adverse weather conditions.

The Cabinet of Ministers has imposed quotas on the export of grain from Ukraine. According to decree №938 of the Cabinet of Ministers of Ukraine, grain traders are allowed to export 0.5 mln tonnes of wheat, 0.2 mln tonnes of barley, 2 mln tonnes of corn, and 1 thsd tonnes each of rye and buckwheat until 2011.

Agricultural companies in Ukraine harvested 37.7 mln tonnes of grain and leguminous crops as of October 13, with an average yield of 2.72 tonne per ha. Agricultural companies processed only 13.9 mln ha of sowing area this season. Agrarians have sown about 7.9 mln ha with winter crops.

According to Vladimir Klimenko, the president of the Ukrainian Grain Association, Ukraine exported 1.7 mln tonnes of wheat, 1.9 mln tonnes of barley, 0.36 mln tonnes of corn, and a total of 4 mln tonnes of grain. According to information from the Ministry of Agrarian Policy, Ukraine exported around 4.5 mln tonnes of grain; specifically: 1.9 mln tonnes of wheat, 2.1 mln tonnes of barley and 0.4 mln tonnes of corn.

Landkom [LKI LN, HOLD] posted its wheat harvest results of 18.36 thsd tonnes, which is 43% lower than we expected. According to Company’s data, the wheat yield was 3.0 tonnes per ha, which is 4% below our expectations. We expected the Company to gather a harvest from all 10.3 thsd ha, but Landkom harvested only from 6.0 thsd ha. This is the reason for the decline, as the decrease in harvested area is 41% lower than we projected.

Kernel [KER PW, U/R] has signed a preliminary agreement to buy an agricultural company in the Kirovograd region for about USD 1.6 mln, which operates about 2.4 thsd ha. The deal should be completed by January 2011. The transaction will include lease rights of 2.4 thsd (the lease period is up to 7 years) as well as equipment, inventories, and biological assets.

Fitch Ratings has assigned a “B” rating (outlook stable) to the planned debut of a Eurobond issue of Avangard [AVGR LI, U/R]. Fitch has also assigned Avangard a national long-term rating of “A+” (ukr). The road show will last from October 11 to 19. The planned volume of the issue is USD 250-300 mln.

Кабинет Министров собирается ввести квоты на экспорт зерна из Украины. По информации от основных игроков рынка, ожидается, что квоты на экспорт будут приняты 11-13 октября и введены до конца 2010 года. Ожидается, что квоты будут установлены следующим образом: кукуруза – 3 млн тонн, пшеница – 0,5-1 млн тонн, ячмень – 0,1-0,2 млн тонн. Ранее правительство хотело ввести квоты на уровне 1 млн тонн ячменя, 1,5 млн тонн пшеницы и 0,1 млн тонн ржи.

Agroton Public, Ltd. [A2TA GR, N/R], a diversified, vertically integrated agricultural producer in eastern Ukraine, will place 26.2% of its shares on the Warsaw stock exchange by end of October. The company is seeking to raise as much as USD 59 mln in the IPO. The offering comprises 5.67 mln newly issued ordinary shares with a maximum price of PLN 30 (about USD 10.5 per share).

Verkhovna Rada has rejected the proposed legislation, which obliged the Cabinet of Ministers of Ukraine to establish a moratorium on grain exports until January 1, 2011.