Highlights

Spring wheat and rye plantings have not been able to compensate for decreased winter plantings in 2015. This translated into decreased estimates of production volumes for these crops. Barley production areas remained roughly on the level of the previous year and farmers made a move towards expansion of corn areas by around 8 percent.

The surge of exports for corn and wheat resulted in the depletion of their stocks on the domestic market as well as a re-evaluation of patterns of domestic consumption for these crops by the Post.

Production

According to a report provided by the Ministry of Agricultural Policy and Food of Ukraine (MAPF), Ukrainian farmers planted: spring wheat – 170 thousand hectares (ha); barley – 1.8 million ha; and corn – 4.4 million ha as of June 14, 2016.

Based on these numbers, the estimated total production areas for major grain crops for marketing year (MY) 2016/17 are the following: wheat – 6.3 million ha (around 10 percent below compared to that of MY2015/16); barley – 2.9 million ha (around 1 percent below); corn – 4.4 million ha (around 8 percent above); and rye – 140 thousand ha (around 7 percent below).

Farmers have already harvested 150 thousand metric tons (MT) of wheat (average yield 3.7 MT per ha) and 541 MT of barley (average yield around 3.4 MT per ha) as of July 5, 2016.

The decreased areas under wheat and rye might be the indication that Ukrainian farmers were reluctant to invest into their production due to the low level of domestic prices causing low margins on these crops as well as unfavorable weather conditions in Autumn 2015.

Based on analysis of the normalized difference vegetation index (NDVI), crop yields might be close to those of MY2014/15, despite the extremely dry autumn similar for MY2015/16. Thanks to the torrential rains starting in mid-April, soil moisture was quickly replenished allowing for optimistic yield estimates. However, the excessive moisture conditions stimulated fungus development and in some parts of the country the soil is excessively wet, preventing effective fungicide spraying. This might deteriorate grain quality due to increased levels of mycotoxins and aflatoxins. In certain cases, farmers could lose parts of their crop in case they cannot ensure timely application of fungicides in their fields.

The second part of June 2016 featured increased temperatures resulting in localized decreases of soil moisture in certain regions of Southern Ukraine. In accordance with NDVI data for June 17-24, 2016 these have not impacted the situation with soil moisture in general. However, yield numbers might be the subject of revision as currently Ukraine is experiencing mixed weather conditions featuring decreased moisture in certain regions and showers in others.

Trade

Since July 2015 Ukraine exported: 17.3 million metric tons (MMT) of wheat; 17.4 MMT of corn, 4.4 MMT of barley as of July 2, 2016. Wheat and barley export numbers have been used as preliminary export figures for MY2015/16.

The estimated wheat flour exports exceed 330 thousand MT for MY2015/16 and have been added to export volumes for wheat in wheat grain equivalent calculated by multiplying the product weight by 1.368.

Domestic wheat consumption is dropping due to decreasing population as well as loss of governmental control over the Crimean Peninsula and parts of the territories in Eastern Ukraine. According to industry insiders flour mills in Ukraine are running at approximately 30 percent of their capacity and millers are trying to balance shrinking domestic consumption with exports.

The major trend during May-June 2016 is the surge of exports of both corn and wheat. These are driven by the need to free up storage capacity for MY2016/17 grain. Additional factor stimulating wheat and corn exports was increase of domestic prices for these commodities induced by international markets.

The ceiling for wheat exports of 16.6 MMT suggested in the Memorandum of Understanding (MoU) on grain exports for marketing year 2015/16, possibly played a role as a “soft" factor limiting actual export volumes.

Consumption

The surge of exports for both wheat an corn for MY2015/16 have led to revision of domestic consumption levels by Post. Corn feed consumption has been decreased, which is in line with 3-4 percent decrease of animal numbers for January-May 2016 compared to the same period of 2015 in accordance with data from the State Statistics Service of Ukraine.

The abovementioned decrease consumption of corn for feed purposes has been partially compensated through increased domestic consumption of wheat for feed purposes for MY2015/16.

At the same time, decreasing volumes of production of both flour and have been used as the rationale for decreased volumes of wheat consumption for milling purposes both for MY2015/16 as well as MY2016/17.

Stocks

Active exports of corn and wheat during May-June 2016 resulted in decrease of ending stocks for these crops, while barley and rye were following the usual trend.

Production, Supply and Demand Data Statistics

Wheat Market Begin Year

2014\2015

2015\2016

2016\2017

July 2014

July 2015

July 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

6300

6283

7115

7110

6400

6353

Beginning Stocks

3670

3670

5178

5174

4202

2726

Production

24750

24745

27274

27332

24000

24458

MY Imports

27

28

50

25

50

20

TY Imports

27

28

50

25

50

20

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

28447

28443

32502

32531

28252

27204

MY Exports

11269

11269

15800

17805

11500

13000

TY Exports

11269

11269

15800

17805

11500

13000

Feed and Residual

4000

4000

4500

4500

4500

4000

FSI Consumption

8000

8000

8000

7500

8000

7500

Total Consumption

12000

12000

12000

12500

12500

11500

Ending Stocks

5178

5174

4202

2726

4252

2704

Ending Stocks

28447

28443

32502

32531

28252

27204

Corn Market Begin Year

2014\2015

2015\2016

2016\2017

October 2014

October 2015

October 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

4625

4630

4085

4084

4200

4423

Beginning Stocks

2402

2402

1819

1876

802

936

Production

28450

28504

23333

23330

26000

26980

MY Imports

28

30

50

30

50

30

TY Imports

28

30

50

30

50

30

TY Imp. from U.S.

0

1

0

1

0

0

Total Supply

30880

30936

25202

25236

26852

27946

MY Exports

19661

19660

16000

16100

17000

17800

TY Exports

19661

19660

16000

16100

17000

17800

Feed and Residual

8000

8000

7000

6800

7300

7000

FSI Consumption

9400

1400

1400

1400

1400

1400

Total Consumption

1819

9400

8400

8200

8700

8400

Ending Stocks

30880

1876

802

936

1152

1746

Total Distribution

9400

30936

25202

25236

26852

27946

Barley Market Begin Year

2014\2015

2015\2016

2016\2017

July 2014

July 2015

July 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

3200

3200

3000

2997

3000

2959

Beginning Stocks

971

971

1265

1282

1021

967

Production

9450

9465

8751

8788

8650

8878

MY Imports

0

1

5

6

5

2

TY Imports

0

1

5

6

5

2

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

10421

10437

10021

10076

9676

9847

MY Exports

4456

4455

4300

4409

4000

4200

TY Exports

4332

3330

3800

4700

4000

4500

Feed and Residual

3200

3200

3200

3200

3200

3200

FSI Consumption

1500

1500

1500

1500

1500

1500

Total Consumption

4700

4700

4700

4700

4700

4700

Ending Stocks

1265

1282

1021

967

976

947

Total Distribution

10421

10437

10021

10076

9676

9847

Rye Market Begin Year

2014\2015

2015\2016

2016\2017

October 2014

October 2015

October 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

185

185

152

151

140

140

Beginning Stocks

128

128

106

109

80

75

Production

475

478

394

391

350

350

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

603

606

500

500

430

425

MY Exports

22

22

20

30

10

20

TY Exports

13

12

20

45

10

30

Feed and Residual

50

45

50

45

50

40

FSI Consumption

425

430

350

350

300

310

Total Consumption

475

475

400

395

350

350

Ending Stocks

106

109

80

75

70

55

Total Distribution

603

606

500

500

430

425