Agroliga : Tendencies of Ukrainian agrarian market in September 2020.

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

Since the end of August, prices for Ukrainian sunflower oil have been growing due to a decline in production perspectives. Unfavorable weather conditions negatively affected sunflower crops in the Black Sea region, as a result of which the production prospects of this oilseed crop for both Ukraine and Russia began to decline. In the main production regions of the Black Sea region, drought was observed, moisture reserves in the soil were at a five-year minimum. And as a result, market estimates of the sunflower seed yield changed from optimistic to much more modest 29-30 million tons for Ukraine and Russia. The record large areas under sunflower in Ukraine are no longer the basis for a record harvest due to a drop in yield.

While the first cuttings of sunflower and soybeans in the Black Sea region produced disappointing yields and low oil content in sunflower, prices for these two crops were at levels never seen before at the start of the season. This conserns to both hryvnia and dollars prices.

In the tenth of September, prices for Ukrainian sunflower oil tended to $ 900 per ton. The difference between supply and demand prices for October supplies was quite significant and reached $ 20-25 per ton. Buyers expected oil from the new crop to enter the market and hoped for a decline in prices, but sellers were not ready for such a significant decline, especially against the background of further deterioration in production prospects for the sunflower harvest and rising purchase prices.

As of September 10, the average demand prices for sunflower oil on FOB basis in Ukraine reached $ 915 per ton, which is a record rate for the last 7 years.

Sunflower oil has become the most expensive vegetable oil in the world due to concerns for the 2020 harvest and for the first time in 4 years is quoted higher than rapeseed oil. Already in mid-September, the prices of proposals for the supply of Ukrainian sunflower oil rose up to $ 980-990 per ton on FOB terms with delivery in November-December.

APK-Inform Agency analysts lowered the forecast for the harvested area in their September report, as well as the yield and gross harvest of sunflower in Ukraine in 2020 to 15.5 million tons. As explained, downward adjustments were made taking into account the data and the generally unfavorable the state of crops and low yields of oilseeds in the main regions of its cultivation in Ukraine - central and southern.

Already in the 20th of September, sunflower prices in the Black Sea region fell by $ 15 per ton in two days. At the same time, grain prices in the Black Sea region continued to rise. The press service of Agritel writes about this. Thus, wheat prices on FOB Odessa terms yesterday rose by $ 2 per ton to $ 232 per ton. According to the report, corn prices on FOB Odessa terms rose to $ 197 per ton. Corn became more expensive than barley, the price of which was $ 195 yesterday per ton FOB Odessa. As for oilseeds, soybean prices continued to rise, while sunflower seeds showed a decline following the price of sunflower oil, which started falling a few days earlier.

Last week, export quotations for raw sunflower oil from Ukraine reached $ 1020-1030 per tonne FOB for October deliveries, which was the highest price level in the last 4 years. 'After reaching such highs, oil prices fell, because many importers were not ready either for such high prices or for their further growth. A decrease in exchange quotations for oilseed goods put additional pressure on prices. Bid prices for Ukrainian sunflower oil with delivery in November-December dropped to $ 910-920 per ton FOB, 'the experts explained. Prices for Ukrainian sunflower oil on a CPT basis also fell, having lost more than $ 40 per tonne since the beginning of this week. Market operators report that refineries have begun to stop accepting sunflower in response to an increase in supply. This may contribute to further weakening commodity prices.

At the end of this week, a downward trend emerged on the Ukrainian wheat export market. Ukrainian traders began to reduce prices for food and feed wheat by 50-100 UAH / t. As of the beginning of September 25, demand prices for 2nd class wheat and fodder are fixed in the range of 7 300-7 550 and 7 200-7 450 UAH / t CPT-port, respectively, which, nevertheless, is, on average, 200 UAH / t higher indicators of the end of last week. Thus, the minimum demand prices by 450-550 UAH / t, and the maximum - by 150-200 UAH / t exceeded the historical highs, which were recorded in late January-mid-February 2019.

The USDA forecast for corn production in Ukraine in 2020/21 MY was lowered by 1 million tons to 38.5 million tons (39.5 million tons in the August forecast). Domestic analysts also lowered the forecast for corn yield in Ukraine to 6.71 t / ha due to drought. Against the background of the current agro-climatic conditions, APK-Inform analysts lowered the forecast for corn production in Ukraine in 2020 to 35.1 million tons, which is 8% lower than the previous estimate and 2% less than last year. In Ukraine, CPT-Odessa corn prices, on August 31, rose by $ 4 per ton compared to August 28, to $ 173 per ton. This is a new maximum since trading forward contracts in 2020/21 MY. Prices for Ukrainian corn of the 2020 harvest rose to the highest level for the beginning of September in the last 4 seasons on the back of strong export demand and rising futures prices. large purchases of American corn by China led to an increase in futures quotes on the Chicago Stock Exchange, which is supported by unfavorable weather in the US corn belt. Prices for Ukrainian corn of the new harvest with delivery in October-December continued to rise and reached $ 180-185 per ton on FOB terms.

Ukraine urgently needs new systems of irrigation and crop insurance - President V. Zelensky. Ukraine needs a long-term strategy to address how climate change is affecting crops. At a meeting of Volodymyr Zelenskyy with business representatives of the Kirovograd region on Thursday, August 27, it was noted that this year there was little rainfall and a serious drought, which negatively affected the harvest. And, given the long-term climate changes not only in Ukraine, but also on the planet as a whole, this may become a problem for more than one year.

Farmers are not advised to sow winter crops in the early stages. Considering that at the beginning of September there is practically no productive moisture in the sowing layer of the soil, it is not recommended to sow early in order to obtain seedlings of winter crops, since seeds that have been in the soil for a long time will not germinate and will lose their viability. In general, under conditions of moisture deficit and summer droughts, it becomes more expedient to grow early-maturing varieties of winter wheat and other crops almost throughout the territory of Ukraine.

With kind regards, team of GC 'Agroliga'.