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More Corn, Soybeans Coming Out of Ukraine

Unapproved GMO soybeans still planted

KIEV, Ukraine-- As U.S. farmers work on planting large 2015 crops, their counterparts in Ukraine are upping their corn and soybean acreage, too.

With a planting schedule similar to northern U.S. Corn Belt states, Ukrainian farmers are currently busy seeding an expected 9.6 million acres of corn, slightly higher than 9.3 million acres in 2015.

Since 2013, the corn seed market has changed drastically. In the highly unstable economic environment of a two-digit inflation rate, interest rate of at least 30% per year, and hard-currency operation restrictions imposed by the Ukrainian central bank, grain producers have shifted to domestically produced seeds, decreasing the seed import.

That does not mean that grain producers increased the use of domestically-bred seeds that comprise about 30% of the Ukrainian corn seed market.

Instead, Ukrainian corn growers increasingly use the domestically grown seeds of the foreign breeds, e.g., Pioneer, Euralis, Limagrain, etc.

USDA TRUST

The funny thing about the Ukrainian areas planted and the prospects for crops is that each and every Ukrainian analytical company verifies its own forecasts with USDA’s estimates.

This is because the USDA uses the state-of-the-art aerospace technologies such as satellite images, whereas most of the Ukrainian analysts base their forecasts on the official government data. Ukraine’s government reports are based on reports by local authorities that may be quite inaccurate because of the existence of the unaccounted planted areas.

For example, Ukraine has what is referred to as a black zone. This is an area that consists of unofficial fields tilled without any agreements that go unaccounted for in any official reports and statistics. This is a form of corruption in which public representatives receive a bribe (involving an agreement that is significantly less than lease cost) to look the other way.

Roughly 17.2 million acres of land (or a quarter of all arable land) are in the black zone, according to the Ukrainian Club of the Agribusiness, which lobbies the interests of the monstrous agricultural companies.

Returning to the massive use of the USDA data in the Ukrainian grain crops forecasts, one can visit the grain-balance webpage of one of the most influential lobbyists of the grain trading companies, namely, the Ukrainian Grain Association (http://uga-port.org.ua/balansy-zerna). All reports there are the translations of the WASDE/USDA reports.

So, the latest published forecast for the 2015/16 Ukrainian grain crops is 58 to 59 million metric tons (mmt). The feed grain is expected to be 35 mmt,  with 24 mmt of it made up of corn. The export of the Ukrainian grain is expected to be 32.0 mmt of which the corn will comprise 17 mmt, similar to a year ago. This means that the domestic consumption of corn this marketing year will be about 7 to 8 mmt (proving the stability of domestic consumption because of limited demand from animal husbandry).

The principal markets for the Ukrainian corn are the EU, Middle East, North Africa, China, Japan, and South Korea.

Corn is the second-most profitable crop in Ukraine after sunflowers (Ukraine is the world's biggest exporter of sunflower oil,) while the soybean is third and continues to grow.

SOYBEAN OUTPUT

Ukraine’s minister of agriculture pegs the country’s soybean acres already planted at 3.7 million acres, 74% of this year’s expected total.

Ukrainian farmers are becoming increasingly interested in planting soybeans despite the lack of domestic interest for consumption of the oilseed.  

So, domestically, soybeans are used only as feed. Soybean meal and oil are exported.

By the way, according to the last ag minister report, 60% of the Ukrainian soybeans tested contain genetically modified organisms (GMO), while officially, the GMO soybeans are not allowed to be grown.

WHEAT OUTPUT

UkrAgroConsult raised its 2016 Ukraine wheat harvest estimate Monday from 19.8 to 21.5 mmt, still below 26.5 mmt a year ago.

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