Winter crops present a significant part in total wheat and barley production in Ukraine. Over the last 5 seasons, planted area under winter wheat made up average 97% of total area. Zaporozhye and Odessa oblasts are the key with the share of average 9%. The share of winter barley increased over the 5 seasons and reached average 35% of total barley area. More than 50% of winter barley area are in Odessa and Nikolayev oblasts. Thus, winter planting campaign, weather and winter crops conditions in southern regions have a significant influence on wheat and barley production and market development.
Upward price trend prevailed on Ukrainian grain market during October – first 10 days of December. Purchasing prices for milling wheat (2 and 3 grades) increased from 3800-4500 and 3750-4350 UAH/t CPT to 4100-4750 and 4050-4650 UAH/t СРТ correspondingly, and purchases were often made at near maximum prices. Feed wheat prices increased too from 3600-4100 UAH/t СРТ to 3800-4400 UAH/t СРТ. Upward trend was less significant on feed barley market due to lower trade activity. Over the mentioned period, prices increased by average 50-100 UAH/t and reached 3300-4000 UAH/t СРТ. Market operators consider reserved farmers selling and high demand from exporters who need to fulfil signed contracts as the reason for price growth. APK-Inform survey showed that planting campaign and winter crops conditions did not influence significantly on grain prices.
Despite the fact that winter crops conditions did not weighed on prices the situation is not unshadowed. However, currently market operators do not see any significant concerns.
Georgi Chiklikchi, Director of farm Drugba (Odessa oblast):
“Grains planting campaign delayed for two weeks and that of rapeseed for one month. Thus, currently of winter wheat are in favorable condition, barley is on phase 1-2 leaves, meaning that the development delayed significantly. So, we have some concerns taking to account lack of snow cover in Ukraine over the last years”.
Vasiliy Oleynik, Director of Vector LLC (Odessa oblast):
“Our company started planting campaign in due time, however the sprouts delayed and are just 3-5 cm. Current crops conditions are favorable.
This year we planted wheat over about 350 ha and barley over 300 ha. Wheat planted area was reduced 2 times due to unfavorable weather. However the situation is not critical”.
Valentina Savchenko, Commercial Director of Zhelev S.S. and Melitopol elevator company LP:
“Currently plantings are heterogenic. Early planted crops are strong and bushy, while later planted crops are weak. Generally seedlings were worse last year but December and February were warm, moisture was sufficient that encouraged plants development and let to reap record crop.
Currently crops conditions are mainly favorable in Southern Ukraine, only 27% of seedlings are in good condition due to cold winter. Now farms are actively fighting against rodents. Further, we can face some weather problems that can significantly influence of winter crops development. Snow cover could help a lot. Thus, currently it seems that 2017 production will be lower”.
Victor Kravchenko, Head of procurement department of State Food and Grain Corporation of Ukraine PJSC:
“Dry autumn was the main reason for delayed planting campaign. Grains had not formed bushes before cold weather came due to late field works. Thus, experts consider production potential to be lower than last year. Moreover, wheat planting campaigned was not fully fulfilled, farmers planted 5.912 mln ha against planned 6.198 mln ha (95%).
We conducted a survey to estimate winter wheat seedlings in Chernigov, Kiev and Vinnitsa oblasts. According to results in Chernigov oblast, 51% of crops are in good condition, 24% in favorable and 26% in unfavorable. In Kiev oblast just 13% of examined fields are in good condition, 50% in favorable and the rest is weak or bad doer. At the same time, 100% of seedlings in Vinnitsa oblast were in favorable condition”.
Tatyana Moroz, expert of trade department of State Food and Grain Corporation of Ukraine PJSC:
“Last year concerns over crop conditions were more severe, however final production was record. We should not wait for high yield this year, nevertheless currently we can expect average output meaning that the situation is not critical in Ukraine.
At the same time today, there are some problems in USA where 30-50% of winter wheat feel lack of moisture and low temperatures. There can be some winterkilling, however we will see the situation clear in the spring. That is why there is no sharp futures decline on CBOT. However, world wheat stocks are so high that only significant losses of crop in USA, Europe or Black Sea can turn the market.
Currently the market is developing like year ago.
ON December 14, the FRS of US increased interest rate that influenced and can further negatively influence on commodity markets in near 1-1.5 month. Currently the harvesting campaign is in progress in Australia and Argentina, and Argentinian wheat is rather competitive now.
Ukraine can export about 11 mln tonnes of wheat by the end of 2016 out of 16-16.5 mln tonnes forecasted in 2016/17 MY.
Russia exported about 13.7 mln tonnes of wheat out of potential 30 mln tonnes. The EU shipped 11.3 mln tonnes and its export potential until the end of the season is 12-13 mln tonnes, in the USA – 12.5 mln tonnes. Thus, there is no lack of wheat supply on the global market.
Demand is one of the key problem for Ukrainian grain. Egypt and Turkey have some problems due to currencies devaluation therefor their demand is low. At the same time, Northern Africa is more interested in Argentinian wheat that is cheaper than Ukrainian and quality is better.
Thus, India is the sole potential destination for Ukrainian wheat today, however, the prospects here is not clear fully. Despite the fact that India eliminated wheat import tax it will reap wheat crop in March-April meaning that we should not wait for active purchases by Indian importers”.
Generally, we can point out that currently market operators mainly are not concentrating on winter crops conditions mentioning that the factor does not have significant influence on prices as the situation is not critical and presented problems were expected due to autumn weather. Winter crops conditions can weigh on prices in February-March.
Alexandrina Ovdienko, Polina Kalayda, APK-Inform Agency
