The heatwave in Ukraine will not have a major impact on the harvest of early crops, but we can no longer count on high yields of late oilseeds, including corn and soybeans, said Taras Vysotsky, acting Minister of Agrarian Policy and Food, during the Unified National Telethon.
He reminded that there are two types of crops grown in Ukraine – early and late. The harvest of early crops is already underway. We are talking about wheat and barley, as well as oats, peas, rye, and rapeseed.
“These crops are also subject to the heat effect, but it is not critical. They are even favorable for harvesting,” the acting minister said.
According to him, the average yield of early grain crops is 37 centners per hectare. However, it will grow as the harvest continues in the southern and central regions. In particular, Odesa, Mykolaiv, Kirovohrad, and Dnipro regions have already harvested more than 1 million tons each. Next, the western and northern regions will start harvesting, where yields will be higher.
As of today, the average yield of early crops is expected to be around 45-48 cwt/ha, Vysotsky emphasized.
“If we look at the later crops, which are primarily corn, sunflower and soybeans, there may be a negative effect of the heat, as it is the peak of flowering, pollination and growth of these crops. It all depends on the weather in the coming weeks. But as of today (it can be stated – IF-U), the current heat will not allow us to collect record figures for corn and sunflower,” said the acting Minister.
Vysotsky said that the production of early grains is expected to reach 27 million tons. The domestic consumption of this group of crops is about 6-8-9 million tons, which is three times higher than the domestic demand. Therefore, there will be no grain shortage in the country, and no sharp price fluctuations are expected.
At the same time, he said, the situation may change in the fall. In August, after the early grain harvest is completed, the situation with other crops will become clear.
“As of today, the price change is expected to be more at the level of inflation or devaluation, because these (crops – IF-U) are export-oriented goods. They are also tied to the hryvnia exchange rate. No sharp price changes are expected based on this levy (of early grain crops – IF-U),” the acting minister stated. He added: “The final forecast for the crop harvest will be made in the second half of August.”
As of June 22, Ukraine exported 2.2 million tons of corn, indicating a high level of activity in the market, according to the analytical cooperative “Start”, created within the framework of the All-Ukrainian Agrarian Council (AAC).
Analysts predict that June will be the most productive month for exports, but in July-August, the figures may decline significantly as the market switches to a new harvest.
“The global situation was unfavorable for Ukrainian corn. Although it is still in demand on the Italian market, its competitiveness is decreasing due to the pricing policy. For example, Argentine corn is sold at $212-213/ton on the Italian market, which is about the same level as Ukrainian corn. At the same time, Argentine corn is several dollars cheaper in Spain, making it more attractive to buyers. Under such conditions, Ukrainian traders are not in a hurry to sell their existing stocks, as their volume is limited,” the experts said.
According to their information, the corn market is entering the off-season, and prices are expected to stabilize in the coming weeks.
“If there is demand, the conditional prices for corn may fluctuate within $172-174 per ton. On average, on the CPT basis, the price will be around $170/ton in the coming weeks,” Pusk summarized.
The global and domestic corn markets are showing a rise in prices due to the problems of growing this crop in South America, according to the analytical cooperative Pusk, created within the framework of the All-Ukrainian Agrarian Council (AAC).
“Today, the situation on the corn market is determined by fundamental factors: problems in South America, which are the main suppliers of corn. Argentina had significant problems this year: droughts and pest damage. Brazil had excessive rainfall. These phenomena reduce the supply of corn in the world. The problems in South America are forcing many buyers to buy corn, and this is driving the market up,” the analysts explained.
In their opinion, buyers realize that in the new season key exporters will reduce production. In addition, the parallel rise in wheat prices also contributes to the rise in corn prices.
Experts expect Ukraine’s corn exports to reach 3 million tons in May. As of May 13, Ukraine has already exported 1.25 million tons of corn.
By next week, the conditional prices for Ukrainian corn will be about $170-178/ton on CPT deep water basis, $178-190/ton on CPT shallow water basis, $190-200/ton on DAP/CIF Constanta basis, $165-175/ton on DAP Vadul basis, according to Pusk.
Contrary to forecasts, Ukrainian corn has started to rise in price on world markets due to increased demand from China, Turkey, Egypt and the European Union, according to the analytical cooperative “Pusk”, created within the framework of the All-Ukrainian Agrarian Council (AAC).
“The expectations of the trade that with the arrival of a new corn crop from Argentina on the world market, demand and prices for Ukrainian grain would fall, did not materialize. Argentine new crop is sold at higher prices than Ukrainian corn. We can predict a rise in prices for corn from Ukraine in the coming weeks,” the analysts said.
According to them, China is actively contracting Ukrainian corn. Other importers, such as Turkey, Egypt, Italy, and Spain, have also started buying a lot of Ukrainian corn. In seaports, the conditional prices for it have risen to $142-145/ton and have been increasing for a week and a half. The supply is sinking, while demand is stable.
“It can be predicted that amid demand, prices will add $2-3 per tonne per week and reach at least $150/tonne on a CPT basis by the end of March,” the experts emphasized.
They said that in April, the main factor of corn price changes will be the information on the grain harvest in Brazil. In April, there will be more reliable information about the harvest in Brazil: the planted areas, soil moisture, and crop condition. This will affect the global market. If the drought continues in Brazil and the harvest is reduced, the price will rise. But for now, this is one of the scenarios. In case of rainfall in Brazil, the situation on the global corn market will be different.
On a DAP basis, Ukrainian corn is traded for delivery in March-April to Italy, Austria and Germany in the range of $192-197/ton, Pusk summarized.
In 2024, IMC Agro Holding intends to expand corn crops and return to pre-war agricultural technology, and is also studying two projects to develop processing, the decision on which will be made in May-June, said Alex Lissitsa, SEO of the agricultural holding, at the Forbes Agrifood conference.
“During the two years of war, we have come a long way. We had 120 thousand hectares and 6 elevators. 100 thousand hectares and 5 elevators were under occupation. As a result of the de-occupation, we managed to enter our territory. However, some facilities were destroyed,” he said.
According to him, the new large dairy farm of the agricultural holding, located on the border with Belarus, had to be closed due to the poor condition of the cows after the occupation, as well as the almost completely destroyed logistics infrastructure around Chernihiv, where all bridges were destroyed.
In the first year, 30 thousand hectares of the agricultural holding’s land were in the war zone and were partially mined. The second year of the war was a stage of rethinking for IMC, and in the third year they managed to reach more or less the planned indicators, explained the SEO of the agricultural holding.
According to him, in 2022, IMC was unable to sow its land and grew mainly wheat. In 2024, the agroholding will return to traditional technological maps and expand the area under corn, as in 2023 it managed to get a record harvest of 20 tons per hectare. IMC was able to achieve such results thanks to favorable weather conditions that offset the problem of fertilizer and pesticide shortages. In addition, the agroholding has the necessary capacity to store corn.
Mr. Lissitsa also noted that IMC refused to cooperate with international traders who behaved incorrectly towards most Ukrainian customers. Currently, IMC prefers to cooperate with the domestic grain trader Nibulon, through which it sells about 70% of its products. IMC has also found new suppliers of sunflower seeds – Ukrainian regional companies in Chernihiv region.
“We used to build relationships with large foreign traders, and now we are establishing partnerships with those we have not communicated with before. We were beautiful, fashionable, and it was not very fun to work with them. And now we realized that we are basically still beautiful, but not so fashionable. And we need to work with local businesses. They offered us a helping hand and we started working again. Now we are really rethinking. Many contracts with international traders are still in court. I don’t know when they will end. Huge amounts of money are stuck there. It is really easier for us to drive up to our neighbors, negotiate and shake hands,” stated the IMC SEO.
Lissitsa also said that most agricultural holdings have not invested in machinery over the past two years, but have been living off the purchase of spare parts, and thus most of the agricultural machinery has been produced.
At the same time, the IMC is considering two processing projects in parallel – one with the EBRD and the other with the IFC.
“I can’t tell you yet, but we are looking at these projects very, very closely and will make a decision in May-June this year,” Lissitsa said.
The agroholding’s SEO emphasized that IMC has no problems with financing and has established partnerships with a number of banking institutions.
“Last year, we were probably one of the first in the agricultural sector to receive a new loan from the EBRD during the war. Raiffeisen financed us for the purchase of machinery. Credit Agricole is now adding more,” Lissitsa summarized and advised farmers to establish transparent relations with banks and be ready to provide them with all the information to get financing for new projects.
Ukrainian corn is sold cheaper than American and Argentine corn by $20/ton on world markets, which is an abnormal distortion and leads to the restraint of sales by Ukrainian farmers, according to the analytical cooperative “Start”, created within the framework of the All-Ukrainian Agrarian Council (AAC).
“Ukraine actively trades corn, significant volumes have already been contracted in January-February. Market operators fear that the supply of corn from Argentina will increase on the world market and the conditions for the sale of Ukrainian grain will deteriorate,” analysts said, adding that prices on CIF terms have fallen sharply, as the supply of Ukrainian corn is high and the demand for it is low.
According to the experts, Ukrainian corn is traded conditionally at $200-210/ton on the European markets, while corn originating from the USA is traded at $220/ton.
“The gap of $20/ton is abnormally large. Ukrainian corn is too cheap on the world markets compared to its American and Argentine counterparts, and there are no objective reasons for such an imbalance,” the UAC believes.
At the same time, the CPT market is not yet active in terms of trade, many farmers are holding back corn and do not want to sell it at low prices. In Odesa ports, CPT prices are in the range of $147-155/ton, and in small ports on the Danube – $150-155/ton.
Large market players have paused in corn trading, while small and medium-sized traders are active on the market. As prices on CPT terms are so low that they make corn trading unprofitable for the average farmer, many farmers are ready to postpone corn sales until summer or even postpone them to the next season. And although Ukraine has significant corn stocks – about 17 million tons – the amount available for sale is an open question, the UAC summarized.
