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April 28, 15:29 Source: APK-Inform Views: 980

Ukraine — forecast of oilseeds production in 2018

The planted areas under oilseed crops in Ukraine demonstrate a steadily upward trend. For 10 recent years, the annual growth rates totaled nearly 3.7%. Due to the fact that the structure of crops production includes both spring oilseed crops (sunflower seed, soybeans, etc.) and winter crops (rapeseed), agrarians have good chances to adapt to the weather-climatic changes in certain regions, and produce highly profitable commodities. In addition to the weather conditions, several other factors also affect on formation of the planted areas, which we will consider in the present article from the point of view of relevant issues for 2018.

 

 

Forecast of the harvest of major oilseeds in Ukraine in 2018

Oilseed crops

Planted areas, `000 ha

Harvested areas,

`000 ha

Yield, c/ha

Production, `000 tonnes

2017

2018*

2017

2018*

2017

2018*

2017

2018*

Major oilseeds

9 046

9 360

8 863

9 141

22,5

23,3

19 903

21 289

Sunflower seed

6 100

6 400

6 061

6 356

22,5

23,5

13 630

14 958

Soybeans

2 000

1 900

1 982

1 884

20,1

20,7

3 982

3 902

Rapeseed

946

1 060

820

901

27,9

27,0

2 290

2 429

winter

899

1 010

774

851

28,3

27,4

2 190

2 331

spring

46

50

46

50

21,8

19,6

101

98

* Forecast of APK-Inform Agency

 

In 2018, the forecast of the planted areas under spring crops faced some troubles due to lagging of time of the planting campaign for nearly 2 weeks due to the long-drawn winter. So, as of April 5, 2017, Ukraine planted sunflower seed throughout 180 thsd ha and started planting soybeans in southern oblasts, on the same date of the current year agrarians did not start planting oilseeds yet. The factor caused some uncertainty regarding plans for the spring crops planting campaign in the period of APK-Inform annual polling of Ukrainian agricultural producers. So, nearly one third of respondents were not ready to specify either they would decrease, or increase the planted areas under oilseed crops in their farms, and what crops they preferred planting in the current year.

 

 

Sunflower seed

According to the analysis of the general structure of planted areas in Ukraine, as well as the results of the annual polling, in 2018 Ukraine will face an upward trend in the planted areas under sunflower seed to 6.4 mln ha, up 5% compared with the last year figures, and up 23% compared with 2013. In most cases, agrarians reported about areas adjustments in favour of the major oilseed crop in the country at the expense of reduction of the areas under barley, soybeans and corn.

Every season, the market of sunflower seed demonstrates the excess of demand over supply and high competition for oilseed raw materials between companies-processors, which provide ones the highest indicators of profits margin. It should be noted that in September-March period of 2017/18 MY bid prices for the oilseed increased from 10`000 UAH/t EXW to 11`600 UAH/t (up 16%). Therefore, after reduction of the planed areas in 2017, the areas under sunflower seed will likely restore and the oilseed will improve its positions.

In September-February of 2017/18 MY, the imports of sunflower seeds material reached a record at 15.4 thsd tonnes (up 12% y-o-y). So, the market will not face a deficit of seeds supply.

Those respondents who planned to reduce the areas under sunflower, called the main reasons of such decision as observance of the crop rotation and production structure (64% of respondents), reduction in favour of other crops (16%, for peas, soybeans, rapeseed) and low purchasing prices (10%).

According to the forecast, in 2018 the general harvest of sunflower seed will potentially reach nearly 15 mln tonnes, up 10% compared with last year, and up 32% compared with 2013. The forecast of yield totals 2.35 t/ha (up 5%).

 

Rapeseed

For the second year in a row, the planted areas under winter rapeseed in Ukraine for the harvest-2018 increased, and totaled more than 1 mln ha, up 12% compared with last year, but down 2% compared with the level of 2013. The remaining areas of winter rapeseed demonstrated the better condition compared with several recent years, which keeps the potential of a good harvest. Both official figures and our polling results support the forecast. According to the the Ministry of Agrarian Policy and Food of Ukraine, as of April 16 892.4 thsd ha of winter rapeseed areas (89%) were in good and satisfactory condition. Also, the pollling showed even higher share of crops in good condition. In western oblasts, there was observed the best crop condition, while in several oblasts of the steppe and forest-steppe zones there was a high share of weak and thinned areas (Dnipropetrovsk, Zaporizhia, Donetsk, Mykolayiv, Sumy, Kharkiv oblasts).

 

 

According to APK-Inform figures, nearly half of agrarians in the country used new hybrids of winter rapeseed for the harvest-2018. At the same time, more than 70% of respondents were satisfied with the quality and price level of seeds.

It is expected that in 2018 agrarians will plant spring rapeseed throughout nearly 50 thsd ha, up 8% compared with last year.

Despite the growth of supply, in July-October bid prices for the oilseed increased from 11`000 UAH/t to 13`000 UAH/t EXW (up 18%). In the reporting period, Ukraine managed to sell 80% of the general harvest of rapeseed (1.7 mln tonnes), due to high demand rates and competitive export prices.

Thus, the general planted areas under winter and spring rapeseed will reach 1.06 mln ha, up 12% compared with last year. If the final losses do not exceed 10%, the harvested areas under rapeseed will reach nearly 950 thsd ha (up 16%). In terms of the average yield at the level of 2 recent years at 2.7 t/ha, the harvest volumes of rapeseed will reach 2.57 mln tonnes (up 12%).

 

 

 

 

Soybeans

In the current year, the situation with soybeans develops in quite irregular way, because many agrarians made adjustments to their plans against the oilseed. The sudden cancellation of VAT refund on soybeans exports, adopted by the Parliament in December 2017, became the major reason. After heated discussions, taking into force period of the draft law was postponed from March 1 to September 1, 2018, however agrarians still claim for its full cancellation. According to the polling, 29% of respondents called the reporting reason as the major one in planning of the planted areas under soybeans.

In such terms, the planted areas under soybeans will reduce, but taking into account several favourable factors (high demand, competitive prices, crop rotation), the reduction rates will be insignificant — to 1.9 mln ha, down 5% compared with last year, but up nearly 40% compared with 2013.

It should be noted that in September-March period of 2017/18 MY bid prices for soybeans increased from 10`200 UAH/t EXW to 12`600 UAH/t (up 23.5%). In the first half of the season, Ukraine already processed and exported record volumes of the oilseed — 600 thsd tonnes and 2 mln tonnes, respectively. There will no such records in the exports in 2018/19 MY, but the processing industry can even break the figures.

In terms of the specified areas and forecasted yield increase by 3-5%, in 2018 the general harvest of soybeans will total 3.9-4 mln tonnes, which will become slightly lower or match the last year harvest results.

Taking into account the above mentioned forecasts of APK-Inform Agency, the general planted areas under major oilseed crops for the harvest-2018 will rise to a record level of 9.36 mln ha, up 3.5% compared with the last year figures, and up 22% compared with 2013. At the same time, the structure of areas will have slight changes. Sunflower seed will remain the major crop with the share of 68% in the general areas under oilseeds (67% last year), the soybean share will total 20% (22%), and rapeseed — 11% (10%).

In 2018, the general harvest of major oilseeds will reach 21.4 mln tonnes, up 8% compared with the last year production. Ukraine will slightly reduce soybean production. Sunflower seed has the potential of breaking a record in production (or close to the record). And the harvest of rapeseed may become the maximum one for 10 recent years. In future, APK-Inform will continue monitoring the planting works, weather conditions and crops condition, in order to update the preliminary forecasts of oilseed supply and demand balances in 2018/19 MY.

 

Julia Ivanitskaya, Oilseed market analyst at APK-Inform Agency

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