Highlights

Ukraine has concluded harvest of all grains as well as planting of winter crops. Some corn areas have been left unharvested, which makes the final corn number tentative at the level of 26 million metric tons.FAS Kyiv further downgraded food consumption for wheat as well as feed consumption for all grains based on the economic situation in the country.

Issues with grain logistics might have resulted in suboptimum export numbers for end of marketing year (MY) 2015/16 as well as for the beginning of MY2016/17. According to the revised information by the State Statistics Service of Ukraine (SSSU) in 2016 farmers harvested: 26.7 million metric tons (MMT) of wheat, 2 percent below the 2015 level; 9.7 MMT of barley, 13 percent above; and almost 404 thousand metric tons (MT) of rye, comparable to the 2015 level as of November 1, 2016. Grain production in the Crimean Peninsula is estimated at: 854 thousand MT of wheat and 528 thousand MT of barley. These numbers are estimated by FAS Kyiv as production volumes for MY2016/17. It should be noted that all production numbers discussed above are presented in bunker weight. Post estimates MY2016/17 wheat quality as: 52 percent milling quality (Ukrainian class 1-3) and 48 percent feed quality (Ukrainian class 4-6) based on SSSU's data as of November 2016. Corn has not been harvested completely. According to a report provided by the Ministry of Agricultural Policy and Food of Ukraine (MAPF), Ukrainian farmers have harvested 3.8 million ha, which translated into 24.2 MMT of grain as of December 2, 2016. The major impediment for corn harvest was intensive late autumn-early winter precipitation in the form of rain and/or snow. According MAPF's estimates around 420 thousand ha of corn was left unharvested (mainly in Poltava, Sumy, Chernihiv and Kharkiv regions) and could potentially add 2.7 MMT to production volume when/if harvested.

Currently, Ukrainian farmers have concluded planting winter grains. SSSU has released official winter grain area numbers as of December 23, 2016: wheat planted on 6.1 million hectares (ha), 2.2 percent above 2016 level; barley – 881.5 thousand ha, 10 percent below; rye – 169.3 thousand ha, 16 percent above. These numbers can be considered as final areas under winter crops in Ukraine taking into account low winterkill rates reported by farmers to date. However, these will be revised in spring 2017 to estimate the actual crop loss.

Trade

Ukraine exported 17 MMT of wheat; 16.6 MMT of corn; 4.4 MMT of barley and 19.7 thousand MT of rye for MY2015/16.

According to the MAPF report Ukraine exported 11.5 MMT of wheat; 7.1MMT of corn; and 4.3 MMT of barley for local MY2016/17 (July 2016-June 2017 for all mentioned crops) as of January 6, 2017.

For MY2015/16, 16.6 MMT of Ukrainian corn was exported, predominantly to a number of EU Member States, China, Egypt and Tunisia.The EU is the single largest traditional buyer, which bought almost 8.5 MMT of corn in MY2015/16, a 41-percent increase compared to the previous MY. Exports to this destination are supported by a 400 thousand MT Tariff Rate Quota for corn offered to Ukraine under the Deep and Comprehensive Free Trade Area as well as fast and inexpensive logistics through ports of Spain, Italy and Netherlands.

A boost in exports to the EU became possible as corn exports to China slumped to around 2.4 MMT in MY2015/16, a 45-percent decrease compared to the previous MY. The major driver behind it was a change in China's domestic policy. MY2015/16 corn exports to Egypt amounted 2.2 MMT, almost a 32-percent decrease compared to the previous MY.

One of the factors presumably limiting corn exports (as well as other grains) out of the country is inefficient operation of the national railway in the second half of 2016. According to industry sources, lack of investments in previous years resulted in shortages of grain hoppers circulating in the country. They also point out a lack of fuel procurement by the state controlled railway for diesel locomotives as the major factor preventing timely grains shipments to ports from a number of inland silos.

Ukraine is a net exporter of grains and does not import significant volumes of these commodities. The only exception is imports of corn seeds (HS Code 100510). For MY2015/16 Ukraine imported 28.6 thousand MT of corn seeds, which was identical to the previous MY. These seeds are predominantly used for domestic seed reproduction by large international seed suppliers.Post believes that Ukraine will remain an active exporter of grains for MY2016/17. Continued depreciation of the national currency will be the major factor pushing grains out of the country. This scenario remains feasible under the assumption that there will be no significant macroeconomic changes in the country that would reverse this trend in 2017.

Consumption

Post has further decreased wheat and rye food consumption for MY2016/17 based on decreasing volumes of bread production in the country.

These two crops are mainly intended for food consumption, namely milling and baking and thus an expected decrease of bread production for MY2016/17 would have a major impact on them.

Rye feed consumption has been decreased to a minimum both for MY2015/16 and MY2016/17 on the grounds that Ukraine started imports of this crop, which points to a deficit of this commodity on the domestic market. Since it is mainly intended for food purposes, it will be replaced as a feed ingredient by other grains widely available domestically. SSSU's reports lowered animal numbers in the country: 5.5 percent decrease in pig numbers and 4 percent for poultry for December-November 2016. The economic situation inside the country does not suggest increased consumption of products of animal origin in 2017. Moreover reports of the local Veterinary Service on outbreaks of African swine fever would likely lead to a further decrease of pig herds in 2017. Based in these assumptions, Post has decreased the country's total feed consumption by 2 percent for MY2016/17.

Stocks

Ending stocks for all grains at the beginning of MY2015/16 demonstrated traditional depreciation to minimal levels induced by active exports of corn, wheat and barley. Rye stocks hit new lows caused by decreasing production of this crop for two consecutive MYs in a row. Post believes that ending stocks for MY2016/17 will be tighter compared to the previous MY due to the high pace of grain exports.

Production, Supply and Distribution Data Statistics

Post's FSI Consumption estimates for wheat are lower than USDA's official data by 1.4 percent for MY2016/17. The rationale behind this reduction is decreased volumes of bread production in Ukraine.

Post's FSI Consumption estimates for rye are higher than USDA's official data by 5 percent for MY2015/16, and 14 percent for MY2016/17. This is based on stable demand for this crop for baking purposes.

Post's Feed and Residual estimates for wheat, barley and corn are follows:

1.wheat, 6.4 percent lower for MY2016/17;

2.corn, 13.4 percent lower for MY2015/16 and 1.4 percent lower for MY2016/17;

3.barley, 6.3 percent higher for MY2015/16 and 11.8 percent lower for MY2016/17;

4. rye, 10 times lower for MY2014/15 and 5 times lower for both MY2015/16 and MY2016/17.

Post's export estimates for wheat are higher than USDA's official data by 1.3 percent, and for barley – 10.7 percent higher for MY2016/17.

Estimated wheat flour, pasta and bakery exports/imports have been added to export volumes for wheat in wheat grain equivalent calculated by multiplying the product weight by 1.368. Grain production numbers reported by SSSU in bunker weight have been converted to estimated commodity (final) weight by subtracting 3 percent, and adding Crimean Peninsula's production numbers.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Ukraine

Jul 2014

Jul 2015

Jul 2016

USDA

Official

New Post

USDA

Official

New Post

USDA

Official

New Post

Area Harvested

6300

6283

7115

7110

6500

6460

Beginning Stocks

3670

367

0

5678

5674

3248

3299

Production

24750

24745

27274

27332

27000

26757

MY Imports

27

28

27

24

25

25

TY Imports

27

28

27

24

25

25

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

28447

28443

32979

33030

30273

30081

MY Exports

11269

11269

17431

17431

15700

15900

TY Exports

11269

11269

17431

17431

15700

15900

Feed and Residual

4000

4000

5200

5200

4700

4400

FSI Consumption

7500

7500

7100

7100

7100

7000

Total Consumption

11500

11500

12300

12300

11800

11400

Ending Stocks

5678

5674

3248

3299

2773

2781

Total Distribution

28447

28443

32979

33030

30273

30081

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Ukraine

Oct 2014

Oct 2015

Oct 2016

USDA

Official

New Post

USDA

Official

New Post

USDA

Official

New Post

Area Harvested

4625

4630

4085

4084

4250

4100

Beginning Stocks

2402

2402

1819

1876

585

1440

Production

28450

28504

23333

23330

27000

25991

MY Imports

28

30

28

29

50

30

TY Imports

28

30

28

29

50

30

TY Imp. from U.S.

0

1

0

1

0

0

Total Supply

30880

30936

25180

25235

27635

27461

MY Exports

19661

19660

16595

16595

18000

18000

TY Exports

19661

19660

16595

16595

18000

18000

Feed and Residual

8000

8000

6700

5800

6900

6800

FSI Consumption

1400

1400

1300

1400

1400

1400

Total Consumption

9400

9400

8000

7200

8300

8200

Ending Stocks

1819

1876

585

1440

1335

1261

Total Distribution

30880

30936

25180

25235

27635

27461

Barley

Market Begin Year

Ukraine

2014/2015

2015/2016

2016\2017

Jul 2014

Jul 2015

Jul 2016

USDA

Official

New Post

USDA

Official

New Post

USDA

Official

New Post

Area Harvested

3200

3200

3000

2997

3050

3047

Beginning Stocks

971

971

1265

1282

909

764

Production

9450

9465

8751

8788

9800

9944

MY Imports

0

1

5

6

5

5

TY Imports

0

1

5

6

5

5

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

10421

10437

10021

10076

10714

10713

MY Exports

4456

4455

4412

4412

5000

5535

TY Exports

4332

4332

4673

4673

5000

5300

Feed and Residual

3200

3200

3200

3400

3400

3000

FSI Consumption

1500

1500

1500

1500

1500

1500

Total Consumption

4700

4700

4700

4900

4900

4500

Ending Stocks

1265

1282

909

764

814

678

Total Distribution

10421

10437

10021

10076

10714

10713

Rye

Market Begin Year

Ukraine

2014/2015

2015/2016

2016/2017

Jul 2014

Jul 2015

Jul 2016

USDA

New Post

USDA

New Post

USDA

New Post

Official

Official

Official

Area Harvested

185

185

152

151

143

142

Beginning Stocks

128

128

106

144

75

108

Production

475

478

394

391

375

393

MY Imports

0

0

16

15

0

20

TY Imports

0

0

16

16

0

20

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

603

606

516

550

450

521

MY Exports

22

22

21

20

10

10

TY Exports

13

13

21

20

10

10

Feed and Residual

50

20

20

2

10

2

FSI Consumption

425

420

400

420

360

410

Total Consumption

475

440

420

422

370

412

Ending Stocks

106

144

75

108

70

99

Total Distribution

603

606

516

550

450

521