Grain and Feed Update

An Expert's View about Crops and Support Services in Ukraine

Posted on: 15 Aug 2012

Better than expected yields, despite harsh growing conditions, led to increased estimates for wheat, barley, and rye.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 8/7/2012 GAIN Report Number: UP1224 Ukraine Post: Kiev Grain and Feed Update Report Categories: Grain and Feed Approved By: Randall Hager Prepared By: Yuliya Dubinyuk, Agricultural Specialist Report Highlights: Better than expected yields, despite harsh growing conditions, led to increased estimates for wheat, barley, and rye. Corn output, however, is expected to be lower than previous estimates, as conditions have been less favorable. Table 1. Area Planted Under Grains and Legumes in Ukraine for Summer 2012 Crop Area Planted, 1,000 ha Change, 2012 to 2011 Crop Area, 2012 % 2011 % % 1,000 ha Wheat (winter and spring) 5,791.0 37.2 6,499.4 45.7 -708.4 -10.9 Barley (winter and spring) 3,438.5 22.1 2,582.4 18.1 856.1 33.2 Corn 4,719.5 30.3 3,620.3 25.4 1,099.2 30.4 Oats 311.5 2.0 287.9 2.0 23.6 8.2 Ry (winter and spring) 302.0 1.9 283.0 2.0 19.0 6.7 GAIN Report – UP1224 – Grain and Feed Update Page 2 of 6 General Information: B ckwheat 292.3 1.9 311.2 2.2 -18.9 -6.1 The harvest of wheat, barley, and rye in Ukraine was close to 99 percent complete at the time of this report. Surprisingly, having suffered extremely unfavorable weather conditions during planting and the winter season, winter crops in Ukraine have been showing better than expected yields. Accordingly, FAS-Kyiv has changed its production estimates for Ukraine. Preliminary estimates for production of wheat, barley and rye were increased to 15.0 million metric tons (MMT), 6.6 MMT, and 0.65 MMT, respectively (see Production Supply and Demand tables in the end of this report). However, production of corn was reduced to 21.0 MMT for reasons explained below. O her grains and legumes 710.4 4.6 652.4 4.6 58.0 8.9 The main Ukrainian winter crops - wheat, barley, and rye – enjoyed quite favorable spring weather conditions so that a good share of winter plantings were able to recover after the harsh fall planting and winter seasons. Cool spring temperatures in Central and Northern Ukraine along with some ‘just in time’ spring showers played a major role in this process. Sunny and warm June weather that followed added to the benefit of the crop and resulted in the higher quality grain that has been reported through the country. The official Government of Ukraine (GOU) data on the areas planted under various crops in Ukraine is shown in Table 1. T tal grains and legumes 15,565.2 100.0 14,236.6 100.0 1,328.6 9.3 Source: State Statistics Committee of Ukraine Over 1.6 million hectares (mln ha) of winterkill areas were replanted with spring crops. Over 0.5 mln ha reportedly was replanted with corn and about 0.5 mln ha with spring barley. Some winterkill area was also replanted with sorghum and other spring crops. UNCLASSIFIED USDA Foreign Agricultural Service Table 2. Production of Grains in Ukraine, as of August 2, 2012 * Area Harvested, Production, Yield, Crop 1000 ha 1000 MT MT/ha Wheat 5450.0 15260.0 2.8 Barley 3240.0 6900.0 2.1 Rye 285.0 660.0 2.3 GAIN Report – UP1224 – GraRin and Feed Update aPage 3 of 6 peseed 510.0 1120.0 2.2 Source: Ministry of Agricultural Policy and Food of Ukraine * - Preliminary harvest data There were some reports of extremely hot and dry weather occurring for up to several weeks in a row during the corn kernel formation phase in the main corn growing regions in Ukraine. The Ukrainian Hydrometcenter has recently reduced its projections for corn production in Ukraine down to 21 MMT. A number of other leading industry experts have also lowered their projections to between 20 MMT and 23 MMT. No definitive estimate can be made at the time of this report, as there is still some time for the corn crop to develop. These projections may change significantly before the main harvest season begins in October. The new Marketing Year for grains (MY 2012/13) in Ukraine started off in July 2012 with the growing world market prices. According to the GOU officials, Ukraine has accumulated significant ending stocks of major crops that should allow the country to fully satisfy its domestic consumption needs and to have some exportable surplus. The State Agrarian Fund has reportedly started acquiring grain for the state reserve to ensure strategic food supply is available for human consumption in the country. GOU policy has not changed as to the export market regulation in Ukraine. In late July 2012, the Ministry of Agrarian Policy and Food of Ukraine and the leading industry organizations signed an Memorandum of Understanding (MOU) agreeing that the exports of major agricultural crops in Ukraine would not be restricted without a two month prior notice to the industry, and such action may not occur unless 80 percent of the exportable quantities of grains would have been exported. Trade representatives and the state officials have been discussing the issues that impact the trade. However, some issues remain unsolved for now, like the lack of grain transporting railroad cars in Ukraine and certain difficulties with obtaining grain quality certificates, etc., that may impact the trade activities and slow down exports from Ukraine to some extent. Grain exports in July 2012 did not pick up significantly, compared to the previous months, the way they usually would at the start of the new season. Reports of crop damage in the US and significant reduction in production of the early cereals in parts of the EU has set the tone for the growing world market prices for agricultural commodities. This has become one of the main reasons that slowed down the trade in Ukraine. However, overall export projections for the major crops in Ukraine were raised for wheat up to 6.0 MMT and for barley, up to, 2.2 MMT. Export projections for corn were left unchanged at this time. It is possible that some corn from Ukraine may find its export market in China as some negotiations have been in progress between the two governments. No final agreement has been reported reached at the time of this report writing. However, major market players from Ukraine have already visited China in lieu of these talks and have UNCLASSIFIED USDA Foreign Agricultural Service 2011/2012 2012/2013 Market Year Begin: Jul 2011 Mark et Year Begin: Jul 2012 Wheat, Estimate Forecast Ukraine USD A USD A Old P o st N ew P o st Old P o st N ew P o st Off icial Off icial Area Harvested 6,657 6,525 6,657 5,300 5,000 5,700 Beginning Stocks 3,340 3,348 3,340 5,614 5,800 5,415 Production 22,124 22,324 22,324 13,000 13,200 15,000 MY Imports 100 1 1 100 1 1 TY Imports 100 1 1 100 1 1 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 25,564 25,665 25,665 18,714 19,001 20,416 MY Exports 5,000 5,000 5,300 4,000 5,000 6,000 TY Exports 5,000 5,000 5,300 4,000 5,000 6,000 Feed and Residual 6,100 6,113 6,100 2,800 3,001 3,800 FSI Consumption 8,850 8,850 8,850 8,900 8,500 8,500 GAIN Report – UP1224 – Grain and Feed Update Page 4 of 6 confirmed their interest in trade. In addition, some traditionally US corn destinations like Northern Africa may become the customers of Ukrainian corn this season. l Consumption 14,950 14,963 14,950 11,700 11,501 12,300 Domestic grain prices have been increasing ever since the start of the new season. However, this has not resulted in increased sales. The farmers have been reluctant to sell cheap while the world markets continued the upward trend. Trade representatives, on the other hand, have been cautious about accumulating large stocks due to the experience with export issues of the previous years. The Black Sea Grain Contract was launched by CME in June 2012. This is becoming more and more popular market price indicator in Ukraine. However, there is still some lack of awareness in the rural areas and some limited communication so the domestic market prices have not been reported to correlate highly with this contract price. E ing Stocks 5,614 5,800 5,415 3,014 2,500 2,116 The forecasts in this report are based on the current projected production and stocks data and on the assumption that exports of these grains continue on with the current policy. Production Supply and Demand Tables Total Distribution 25,564 25,763 25,665 18,714 19,001 20,416 Yield 3.32 3.42 3.35 2.45 2.64 2.63 UNCLASSIFIED USDA Foreign Agricultural Service 2011/2012 2012/2013 Market Year Begin: Jul 2011 Mark et Year Begin: Jul 2012 Barley 2011/2012 2012/2013 Ukraine E s ti m a te Forecast Market Year Begin: Oc t 2011 Mark et Year Begin: Oc t 2012 Corn USD A USD A Old P o st N ew P o st Old P o st N ew P o st Off icial Off icial Estimate Forecast Ukraine A USD A USD A rea Harvested 3,684 3,684 3,684 3,400 3,600 3,300 Old P o st N ew P o st Old P o st N ew P o st Off icial Off icial Beginning Stocks 794 650 794 1,522 1,371 1,122 A ea Harvested 3,544 3,544 3,544 4,5 4,3 4,72 Production 9,098 9,098 9,098 6,000 7,500 6,600 Beginning Stocks 1,121 1,100 1,121 1,209 1,183 866 MY Imports 30 23 30 30 30 30 Production 22,8 8 22,8 8 22,500 24,00 23,00 21,00 TY Imports 30 35 35 30 30 30 MY Imports 5 45 45 5 45 5 TY Imp. from U.S. 0 0 0 0 0 0 Y Imports 50 45 45 0 45 0 Total Supply 9,922 9,771 9,922 7,552 8,901 7,752 TY Imp. from U.S. 5 5 2 2 MY Exports 2,800 2,800 2,500 2,000 2,500 2,200 otal Supply 24,0 9 23,983 23,666 25,259 24,228 21,916 TY Exports 2,300 2,300 2,300 2,000 2,500 2,500 MY Exports 1 , 1 , 15,0 14,0 1 ,5 14,0 Feed and Residual 4,000 4,000 4,700 3,200 4,000 3,200 TY Exports 14,0 14,0 15,0 14,0 14,5 14,0 FSI Consumption 1,600 1,600 1,600 1,600 1,600 1,600 Feed and Residual 7,5 7,5 ,5 7,5 6,5 6,0 Total Consumption 5,600 5,600 6,300 4,800 5,600 4,800 FSI Consumption ,300 , 00 ,300 1,800 1, 0 1,300 Ending Stocks 1,552 1,371 1,122 752 801 752 GAIN Report – UP1224 – Grain and Feed Update Page 5 of 6 t l Consumption 8,800 8,800 7,800 9,300 ,3 0 ,300 Total Distribution 9,922 9,771 9,922 7,552 8,901 7,752 Ending Stocks 1,209 1,183 866 1,959 1,42 616 Yield 2.47 2.47 2.47 1.76 2.08 2. Total Distribution 24,009 23,983 23,666 25,259 24,228 21,916 Yield 6.44 6.44 6.35 5.33 5.35 4.45 UNCLASSIFIED USDA Foreign Agricultural Service 2011/2012 2012/2013 Market Year Begin: Jul 2011 Mark et Year Begin: Jul 2012 Rye Estimate Forecast Ukraine USD A USD A Old P o st N ew P o st Old P o st N ew P o st Off icial Off icial Area Harvested 285 278 280 300 300 300 Beginning Stocks 189 299 174 134 110 114 Production 550 579 579 450 500 650 MY Imports 0 2 2 0 2 2 TY Imports 0 0 0 0 0 0 TY Imp. from U.S. 0 0 0 0 0 0 Total Supply 739 880 755 584 612 766 MY Exports 5 15 11 5 5 15 TY Exports 5 15 11 5 5 15 Feed and Residual 50 50 50 50 50 50 FSI Consumption 550 580 580 400 477 580 Total Consumption 600 630 630 450 527 630 Ending Stocks 134 110 114 129 80 121 GAIN Report – UP1224 – Grain and Feed Update Page 6 of 6 Total Distribution 739 755 755 584 612 766 Yield 1.93 2.08 2.07 1.5 1.67 2.17 UNCLASSIFIED USDA Foreign Agricultural Service
Posted: 15 August 2012

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