The lowest corn harvest since 2007-2008 is expected in the countries of the European Union, which is caused by an abnormal drought that has gripped the main corn-producing countries in the past few weeks.
Against this background, the EU imports 13 million tons of corn from Ukraine to cover its needs, according to the website of the electronic grain exchange GrainTrade with reference to the report of the chief analyst of Argus Media (France) Nathan Cordier, which he announced during the meeting of grain traders “Trend and Hedge Club”.
According to him, Bulgaria, Romania and Hungary are the largest corn producers in the EU, and production performance in these countries will be disappointing in 2022.
“We expect Romania to harvest 8 million tons of corn, Hungary 4.5 million tons, and Bulgaria 15 million tons. These countries exported corn to Spain, Italy and Turkey, which were the main markets. low harvest in Brazil, exported grain to the Middle East and North Africa. This season, we expect that the supply of exports will be low,” GrainTrade quoted Cordier’s report as saying.
The expert noted that three heat waves have occurred in France since the beginning of corn sowing, so its harvest is expected at 11.2 million tons, and will be harvested from only 68% of the area. Thus, the yield of corn in France will be only 8 tons / ha, which is the worst result of the country in the last 20 years.
According to Cordier’s forecasts, Europe will be forced to import 23 million tons of corn to cover its needs, of which it will import 13 million tons from Ukraine, and another 5 million tons from Brazil.
As reported, the Minister of Agrarian Policy and Food Mykola Solsky in early August announced an increase in the forecast for the harvest of grain and oilseeds in Ukraine this season by approximately 5-7 million tons – up to 65-67 million tons from 60 million tons.
At the same time, in the July report, the US Department of Agriculture forecasts the harvest of Ukrainian wheat in the 2022/2023 marketing year (MY, July-June) at the level of 19.5 million tons, its export – 10 million tons, domestic consumption within the country – 10.2 million tons. The corn harvest is estimated at 25 million tons, export – 9 million tons, domestic consumption – 10.7 million tons.
In early July, the Ukrainian Grain Association (UGA) increased the forecast for the harvest of grain and oilseeds in Ukraine in 2022 by 4.4% compared to the May forecast – up to 69.4 million tons from 66.5 million tons.
According to her forecasts, in 2022, a wheat harvest is expected at the level of 20.8 million tons (+ 8.3% compared to the organization’s May forecast); 27.3 million tons of corn (+4.6%); 6.6 million tons of barley (forecast kept); 9 million tons of sunflower (forecast kept); 2.2 million tons of soybeans (+4.7%); 1.5 million tons of rapeseed (+13.3%).
The international research company Corteva Agriscience has established export supply chains for corn seeds from Ukraine to the EU, and in the context of the Russian military invasion plans to increase its exports to European countries by 16 times by the end of the year compared to last year.
According to a press release from the company, as of early August, it has already shipped 3,000 tonnes of corn seeds grown at its seed complex in Poltava region to the European Union.
The company clarified that, for security reasons, it suspended the operation of the seed plant immediately after the start of the Russian invasion of Ukraine, but at the initiative of the employees themselves, after some time, resumed the operation of the enterprise. The launch of its work made it possible to provide Ukrainian farmers with seed material that is critical for the sowing campaign.
Corteva, in the context of Russian aggression, also for security reasons, refused to supply seeds of Ukrainian production by land to the countries of the Caucasus and Central Asia, but expanded logistics to the EU as much as possible.
“On the production lines of the Corteva plant in Ukraine, high standards of seed production have been introduced, which allow us to produce goods that meet all the quality criteria adopted in the EU. Seeds are controlled by many indicators at all stages of production – from field to bag, and meet the maximum requirements of both Ukrainian, and foreign farmers choosing Corteva genetics,” the company said.
Earlier, in April, the company decided to leave the Russian market due to the military aggression of the Russian Federation against Ukraine.
Corteva Agriscience is a global agricultural company. It offers farmers comprehensive solutions to maximize yields and profitability. It has more than 150 research facilities and more than 65 active ingredients in the portfolio.
The Turkish vessel Polarnet, which left the port of Chornomorsk (Odessa region) on August 5 with 12,000 tons of corn from the Kernel agricultural holding, arrived at the Turkish port of Derince on August 8.
Kernel completed one of the most important missions – the first ship with Ukrainian grain arrived at its destination. The shipment was carried out as part of the initiative for the safe transportation of grain and food from Ukrainian ports,” the group of companies wrote on Facebook on Tuesday.
It is specified that the ship was loaded with corn at the Transbulkterminal grain terminal in Chornomorsk, which is part of Kernel. In the 2020/2021 marketing year (MY, July-June), the terminal handled 7.6 million tons of grain crops, which is 22% more than in MY 2019/2020, and became the largest in the country in terms of transshipment of agricultural products.
Agropromholding emphasized that Ukrainian agricultural exporters remain key suppliers of foreign exchange earnings to Ukraine, which is an important positive factor for the economy of the warring country.
“If we manage to maintain the trend and increase exports, farmers will not have to reduce the area under crops, and Ukraine will feel a deficit in state budget revenues,” Kernel summed up in the message.
Before the war, Kernel ranked first in the world in the production of sunflower oil (about 7% of world production) and its export (about 12%), and was also the largest producer and seller of bottled sunflower oil in Ukraine. In addition, the company was engaged in the cultivation of other agricultural products and their sale.
Its largest co-owner through Namsen Ltd. is Ukrainian businessman Andrey Verevsky with a share of 41.3%.
The agricultural holding in fiscal year 2021 (FY, July 2020 – June 2021), increased its net profit by 4.3 times compared to FY 2020 – up to $513 million, its EBITDA increased 2.1 times – up to $929 million, revenue – by 38%, to $5.65 billion.
The U.S. Department of Agriculture (USDA) in its report for June published on Friday increased the forecast for Ukrainian corn crop for trade year (TY) 2022/23 by 5 million tonnes compared to the forecast a month ago, to 25 million tonnes, while keeping the export estimate at the level of 9 million tonnes.
U.S. experts increased the forecast for carryovers for 2022/23 TY by 4 million tonnes, to 12.07 million tonnes compared to 6.77 million tonnes for 2021/22 TY.
In addition, USDA raised the estimate of domestic consumption in 2022/23 TY by 1.5 million tonnes, to 10.7 million tonnes.
According to the report, in general, the forecast for the feed grain harvest in Ukraine for 2022/23 TY has been increased by 5.2 million tonnes, to 31.76 million tonnes, although at the same time, the export estimate has been reduced by 0.2 million tonnes, to 10.83 million tonnes.
U.S. experts have increased the forecast of feed grain carryovers following the results of 2022/23 TY by 3.9 million tonnes, to 13.06 million tonnes compared to 7.77 million tonnes at its beginning.
In addition, USDA raised the estimate of domestic consumption of feed grains in 2022/23 TY by 1.5 million tonnes, to 15.65 million tonnes.
The U.S. Department of Agriculture recalled that in 2020/21 TY, the wheat harvest in Ukraine amounted to 25.42 million tonnes, and exports reached 16.85 million tonnes. According to its estimates, in 2021/22 TY, with a crop that has grown to 33.01 million tonnes, exports will increase to 19 million tonnes, and carryovers – from 1.51 to 5.61 million tonnes. In addition, U.S. experts expect domestic wheat consumption in Ukraine to grow to 10 million tonnes in 2021/22 TY from 8.7 million tonnes in the previous TY due to livestock.
As for corn, according to the report, in the past 2020/21 TY, its harvest in Ukraine was 30.3 million tonnes, and exports – 23.86 million tonnes. According to USDA estimates, in this ending trade year, with a corn crop that has grown to 42.13 million tonnes, its exports will decrease to 23 million tonnes, and carryovers will jump from 0.83 to 6.77 million tonnes. In addition, U.S. experts expect domestic corn consumption in Ukraine to grow to 13.2 million tonnes in 2021/22 TY from 7.1 million tonnes in the previous TY, also due to livestock.
In general, the feed grain harvest in Ukraine in 2020/21 TY, according to the U.S. Department of Agriculture, was 39.59 million tonnes, and exports were 28.15 million tonnes. According to USDA estimates, in this ending TY, with a coarse grain harvest that has grown to 53.51 million tonnes, it will increase only to 29.06 million tonnes, and carryovers will jump from 1.65 to 7.77 million tonnes. In addition, the experts expect in 2021/22 TY an increase in domestic consumption of coarse grains in Ukraine to 18.37 million tonnes from 12.41 million tonnes in the previous TY, also due to livestock.
The Czech railway carrier ČD Cargo delivered the first train with 1,800 tonnes of corn from Ukraine to the German port of Brake for subsequent shipment to Egypt on a grain carrier ship.
Such a change in logistics routes is necessary to free up silos in Ukraine to receive a new crop, and to avoid starvation in North Africa and Asia that consume Ukrainian agricultural products, according to a posting on the website of the publication zdopravy.cz (the Czech Republic) on Tuesday.
“We see this as a help and at the same time a business opportunity. Due to the Russian invasion, Ukraine cannot export grain in the traditional way through the Black Sea ports. A new harvest is approaching, and the silos in Ukraine are still full. Therefore, it is necessary to decide how to get at least part of the stocks by rail across Europe,” Board Chairman of ČD Cargo Tomáš Tóth was quoted as saying.
The Czech railway carrier returned with a batch of corn from Ukraine, where it had previously delivered a batch of humanitarian aid and military equipment.
At the same time, railway exports from Ukraine are fraught with problems due to different gauges in the EU and Ukraine, as well as insufficient capacity of logistics routes.
“Firstly, these are different dimensions: carriers can either pick up wheeled carts or reload the cargo. However, transshipment options are limited. Another bottleneck is, respectively, border crossings. Their capacity is significantly limited, for example, in the Elbe valley between Děčín and Dresden. Unloading capacities in ports are also not unlimited,” the publication said.
Zdopravy.cz recalled that Ukraine is one of the main suppliers of grain and other crops to the world market. Due to the blockade of its seaports by Russian ships, wheat exports have stopped, the country needs to export about 20 million tonnes of grain to avoid starvation in the countries of North Africa and Asia, which traditionally purchase Ukrainian agricultural products.
Agrosem LLC (Kyiv), a distributor of agricultural products, seeds and agricultural machinery, has launched a railway route from Ukraine to Austria, which will export batches of Ukrainian corn on a weekly basis.
Agrosem’s Facebook page reported on Tuesday that the first train of 25 hopper cars arrived at the Austrian customer on May 6. Based on the average carrying capacity of grain wagons of 72 tons, the volume of a weekly consignment of corn sent to Austria will be approximately 1.8 thousand tons.
“Customers in Ukraine and Austria are happy with the result, but the process was complicated, especially due to the difference between the width of the tracks in Ukraine and Europe. This required finding stations where it would be possible to transfer from the Ukrainian train to the Austrian one, and it was also necessary to find out the availability free wagons in both countries. But we are confident that the train will run weekly, delivering products to Europe,” the company explains.
According to the director of “Agrosem” Oleksiy Kulik, whose words are quoted by the press service of the company, it is now very important to support Ukrainian farmers and find solutions for the export of grown products. “We must do everything to ensure that Ukrainian farmers can sell their products in Europe at market prices,” he stressed.
Ukrainian Ambassador to Austria Vasyl Khyminets, Minister of Agriculture, Forestry, Ecology and Water Resources of Austria Elisabeth Kostinger, General Director of the Austrian Federal Railways Andreas Matt and Director of Agrosem Kulik participated in the organization of the export route.
“Agrosem” is the official distributor in Ukraine of agricultural machinery and spare parts, seeds, fertilizers and plant protection products. The company offers solutions in the field of precision farming, telematics systems, automated and unmanned vehicles aimed at improving product efficiency and saving resources in the agricultural production process.
According to the Unified State Register of Legal Entities and Individual Entrepreneurs, the ultimate beneficiary of Agrosem LLC is Oleg Zvyagintsev with a 35% stake in the company’s authorized capital, Igor Zvyagintsev (15%), Alexei Kulik (15%) and US citizen Alexander Weiner (35%).
