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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


07 November 2013

USDA GAIN: Ukraine Grain and Feed Update October 2013USDA GAIN: Ukraine Grain and Feed Update October 2013

Increased output for the current marketing year means that Ukraine will continue to be a strong competitor in international trade, and the pace of exports is now increasing as product is moving from the field into export channels. Overall returns are expected somewhat lower, however, as commodity prices have come down from mid-year levels.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Post:

Kiev

Author Defined:

Production

In the current season, production of major grains in Ukraine is higher than in the previous year, except for rye (see Table 1 below). Corn production is expected to be an all time high but the potential number may be somewhat reduced due to unfavorable weather at harvest time. Continuous rains in September and in the beginning of October affected the fields greatly. Harvesting equipment had hard time getting into the fields. More so, corn that is being harvested at present has high moisture levels. In addition, with low corn prices and high crop drying costs farmers in Ukraine face a tough choice. Some consider leaving the crop in the field either to let it dry as long as possible or not to be harvested at all (if production costs exceed potential sale price). Thus, FAS-Kyiv is projecting overall corn production to be at about 26 million tons (see PSD tables in the end of this report).

Winter crop plantings were several weeks behind schedule due to continuous rains. Next year’s
production of winter grains may be negatively affected by late planting dates and consequent
slower/lesser development of the plants prior to the beginning of the winter season.

Trade

Commodity prices have dropped significantly in July 2013 and remained at the level of MY 2011/12 (see graphs below) due to high production in Ukraine and forecasted good world production in general. Ukrainian producers seem to have a tendency to hold grain in storage on the expectation of a better price and due to the fact that the current market prices are below their breakeven price point. Corn production for some may become completely unprofitable due to high moisture level, which drives up processing costs.

The first shipment of 800,000 MT of corn to China is said to be on the way. The State recently reported that the State Food and Grain Corporation started loading the first Panamax to China in late October 2013 with about two million metric tons (MMT) projected for shipment yet this year.

The main buyers of Ukrainian wheat are once again South Asian countries like Bangladesh, Thailand, Japan, and Indonesia. Preliminary reports show that since the beginning of MY 2013/14 in July 2013 up until the end of October, Ukraine has exported about 4.1 MMT of wheat, and 1.8 MMT of barley.

New MY exports are projected to be quite high, especially with large corn and wheat production. However, industry experts believe that Ukraine’s top capacity is to export about three MMT of grains a month the most during active season (December-January usually is much slower per the weather conditions). Some administrative issues also remain in place that slows down the speed of domestic grain transportation.

Stocks

Ukraine is increasing held stocks of all major grains as the production was high and there is some storage available to the private producers. Many are expected to take advantage of their own storage to maximize the profitability of the crops as the current market prices are very low. Major grain stocks are expected to remain high in Ukraine thought the season with wheat accumulating the most due to potentially risky winter crop conditions.

November 2013

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