6 August 2014
Ukrainian farmer and leading sugar producer Astarta (AST PW) completed harvesting its early crops, having gathered over 200,000 tons of winter wheat and barley (collectively, down 16% yoy), the company reported on Aug. 5. The company decreased its area under winter crops 25% yoy this season to 45,000ha. Astarta reported it achieved a 5.0 t/ha average yield of winter wheat and 4.8 t/ha for barley.
Alexander Paraschiy: The company’s results of early crop yields look like the best in company history: wheat yields are 5% better compared to the previous high reported last year (4.8 t/ha), while yields for barley are much better than the previous high (3.3 t/ha) recorded in 2012 (last year, the yield was 3.0 t/ha). The good results of the winter crop harvest are in line with the company’s expectation that this season might become even more successful for its farming business than the last.
However, in and of themselves, the results provide little information on Astarta’s future harvest, as winter crops are no longer core farming items for Astarta. This season, the company decreased its share of land under winter crops to 19% from 25% a year before, while maintaining its total cultivated area at the constant yoy level of 240,000ha. Key crops this season will be soybeans (27%), corn (21% of area) and sugar beet (20%). We expect a shift of the company’s crop mix into more profitable crops, possible better crop yields, and this year’s launch of its soybean processing facility will enable Astarta to improve its 2014 EBITDA, despite average crop prices being lower this year.