Trigon Agri A/S (STO: TAGR) gave an operational update this morning. The soft commodities producer said that dry weather conditions this spring have negatively affected expected harvest for the full year. The company made the decision to cut back sunflower seeding in Stavropol area as a result. Even still, the company expects to roughly match last year’s harvest due to improved yield prospect in other areas.
The largest crop by seeded area is once again wheat with 41%.This is followed by sunflower at 25%, down sharply from 37% last year. Rapeseed harvested area on the other hand is up sharply from 6% to 17%. Also some corn, barley, soya and sugar beet seeding have been made. The spring sowing has been completed and harvesting is set to start shortly. The total expected harvested area is 86 thousand hectares (down from 89 thousand) with 61% in Ukraine and 39% in Russia. The current domestic crop prices are higher than last year so the company said that if the prices remain or improve in H2, the group is well positioned to show a strong improvement on its full year 2012 financial results. Last year was the first profitable year in company history.
There continues to be great interest in black earth region farming investments. Just last week Pareto Securities compared valuations of Trigon Agri, Alpcot Agro (STO: ALPA) and Black Earth Farming (STO: BEF SDB) to an acquisition made by Cherkizovo Group which included 30 000 hectares of farmland. The investment bank concluded that the three companies are trading at a significant discount to that. Trigon Agri has previously said it aims to acquire a new 30 000 hectare production cluster in Rostov, Russia and to do away with a cluster in Samara. The parties agree that Trigon Agri will pay for the acquisition with 18 500 hectares of land in Samara
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