Agroliga : Tendencies of Ukrainian agrarian market in October. Harvest 2020.

Traditionally, representing to your attention a brief overview of the world and Ukrainian agrarian sector news.

Ukraine has become the main supplier of vegetable oils to the European Union. This is evidenced by the data of the report of the European Commission. In particular, EU imports of sunflower oil increased by 2% to 462.4 thousand tons, soybean oil - by 10% to 123.1 thousand tons, rapeseed oil - by 20% to 81.8 thousand tons, palm oil - by 1% up to 1,453.6 thousand tons. According to the report, the main supplier of sunflower oil to the EU in the reporting period was Ukraine - 93.2% (431.14 thousand tons). Ukraine also became the leading supplier to the EU for 13 weeks of the season of rapeseed and soybean oil - 40.6% (33.19 thousand tons) and 42.2% (51.89 thousand tons), respectively. Ukraine is also the first in the TOP-5 suppliers of rapeseed to the EU - 66.8% (966.6 thousand tons), the fifth - in the top suppliers of sunflower - 6.9% (5.48 thousand tons).

In early October, prices for Ukrainian corn rose by $ 10-15 per ton in just a week following the strengthening of stock market indices and weak supply in the domestic market. And, as expected, they continued to grow after the USDA forecast for corn production in Ukraine in 2020/21 MY was lowered by 2 million tons to 36.5 million tons (38.5 million tons in the September forecast). According to the same forecast, the forecast for corn exports from Ukraine in 2020/21 MY was also lowered by 2 million tons to 30.5 million tons against 32.5 million tons in the September forecast. At the same time, according to the forecast of the Ukrainian Grain Association (UZS), the volume of corn production is forecasted at the level of 32.5 million tons, which is 8% lower compared to the September forecast of 35.3 million tons. At the same time, the export of corn is projected at 27.2 million tons (previously - 29 million tons).

Failure by farmers to deliver corn forwards can reach 90%. Ruslan Rashko, director of the Kais Agro company, spoke about this. 'According to our statistics, non-fulfillment by farmers of supplies under forward contracts is about 90%. Corn, which at the time of the conclusion of the forward at the elevators was 4 thousand hryvnyas, and now at 6-6.2 thousand hryvnias. - nobody sells. The price of the issue, for example, from 5 thousand tons - 11 million UAH. The most honest and incorruptible courts are much cheaper, 'he explained. 70% of those polled (about 400 votes) plan to default on forwards for the supply of corn this season. At the same time, 12% of farmers are planning to go into a 'hard' default and sell corn at market prices, and 10% will agree to ease the terms of the forward contract. 21% of the farmers who voted believe that 'it is easier to pay the forfeit and sell corn grain at $ 200 per ton.' However, this is not the limit. In Ukraine, corn prices on FOB terms reached $ 215 per ton, which is the highest level since the end of 2013/14 MY.

There are many factors influencing the price hikes for sunflower oil this year, the CEO of Sunvin Group said. According to the expert, the prices of sunflower oil were influenced by: crop losses in Ukraine and Russia, the intensification of Chinese purchases of sunflower oil by forwards, a drop in demand for palm oil, as a result of which demand shifted towards liquid fat and oil products, India's reluctance to produce purchases at current prices, and to import soybean oil during an uptrend in prices against the backdrop of declining production in the largest exporting country - Argentina. Although sunflower oil prices have declined from their recent peak to around $ 1,020 per tonne, he believes prices are still non-tradable, higher than competing oils, which could shift elastic demand. In addition, since Ukraine and Russia are the largest producers and processors, of course, any reduction in the harvest in these countries will affect the sunflower oil market worldwide. The expert believes that the more significant the decline, the more serious the deficit in the export availability of sunflower oil will be, which will change its prices as a result. Also, UZA significantly reduced the forecast of the gross sunflower harvest from 16.1 million tons to 12.9 million tons due to a decrease in yield from the forecasted 2.5 t / ha to 2 t / ha due to unfavorable weather conditions.

In a new report, UZA has revised the assessment of wheat harvest volumes - the indicator has been reduced from 26.6 million tons to 25.3 million tons. At the same time, the assessment of wheat exports remains at the level of 17.5 million tons, as agreed in the Memorandum between market participants and Ministry of Economic Development, Trade and Agriculture. In Ukraine, export prices for wheat on a FOB basis have continued to increase since the third decade of August and have now exceeded the maximum level since the beginning of February 2019, writes 'APK-Inform'. According to the material, under the influence of the above factors, as of the beginning of October 20, the offer prices for wheat with 12.5% ​​protein and fodder delivered at the end of October-November from deep-sea ports reached $ 255 and $ 250 per ton FOB, which is $ 6-7 per ton exceeds the indicators a week earlier and is on average $ 50 per ton higher than the indicators of the third decade of August.

According to analysts, on October 21, prices for main crops on CPT Odessa conditions were at the following levels:

- $ 243 per ton for wheat, 11.5%, which is more than $ 5 per ton more than at the beginning of the week;

- $ 218 per ton for corn, which is more than $ 10 per ton from the beginning of the week;

- feed barley traded at $ 197 per ton, an increase of $ 5 per ton;

- prices for sunflower seeds on EXW terms are about $ 560 per ton (including VAT) in the central regions of the country, which is about $ 20 higher since the beginning of the week. As for soybeans, the CPT Odessa prices for GMO varieties are $ 460 per ton, which is also more than $ 20 per ton more.

Agroliga is also ready to take stock of MY 2019/2020. In the context of grain crops, we have threshed:

- winter wheat - 16,788.04 tons, with a yield of 6.2 tons / ha (2019 - 15461.73 tons);

- sunflower - 10,515.7 tons, with a yield of 4.02 t / ha (2019 - 17,850.64 tons);

- spring barley - 1571.35 tons, with a yield of 5.7 t / ha (2019 - 1414.2 tons);

- winter rapeseed - 1644.1 t, with a yield of 2.2 t / ha (not sown in 2018).

Unfortunately, some crops suffered from the drought a little more, but this fact did not affect the final result. Overall, we are satisfied. The year passed without extreme conditions for the harvest, but the dry autumn does not allow us to return to sowing winter rape, which is developing well thanks to the mild and warm weather conditions. This year, as winter crops, only two crops have already been sown, which are guaranteed to be accepted in conditions of a lack of moisture - wheat and barley.

With kind regards, team of GC 'Agroliga'.