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Commodity Intelligence Report
June 21, 2017

Ukraine: Winter Wheat Conditions Deteriorate in Central and West but Remain Good in the South; Planting of Spring Crops is Complete

Unfavorable weather has reduced yield prospects for winter wheat in north-central and western Ukraine. Persistent dryness, coupled with below-normal temperatures during April and mid-May, hampered crop development and severely reduced crop vigor in western Ukraine, as indicated by satellite-derived vegetation indices (the normalized difference vegetation index, or NDVI). Although wheat yields in the drier areas will likely be substantially reduced, the lower production could be largely offset by the high potential yields in southern Ukraine where weather was conducive for winter-crop development. The NDVI map highlights the striking difference between conditions in southern Ukraine compared to conditions to the north and west. USDA estimates 2017/18 Ukraine wheat yield at 3.79 metric tons per hectare, down 9 percent from last year’s record but 5 percent above the 5-year average. Production is forecast at 25.0 million metric tons, down 1.8 million from last year.

The sowing of 2017/18 spring crops in Ukraine was finished by mid-June. According to the Ministry of Agrarian Policy and Food (MAPF), 4.48 million hectares (mha) of corn were planted by June 13, virtually matching last year’s level. Soybean area nearly matched last year as well, at 1.88 mha. Typically, the planted area reported by MAPF in mid-June for corn and soybeans is close to the final sown area reported by the State Statistical Committee (SSC) in July. The USDA estimates harvested area at 4.4 mha for corn, and at a record 2.0 mha for soybeans. Based on the assumptions of normal weather during the remainder of the growing season and a continuation of the steady improvement in agricultural technology, the yields for both crops are forecast at near-record levels. Corn production is forecast at 28.5 million tons (mmt), up 0.5 mmt from last year but 2.4 mmt below the 2013/14 record. Soybean production is forecast at 4.6 mmt, surpassing last year’s record by 0.3 mmt.

As of June 13, with planting essentially complete, sunflower area is reported by MAPF at 5.58 mha, slightly surpassing the 5.48 mha sown by the same date last year. According to interviews with private commodity analysts in Ukraine, sunflower area is under-reported by agricultural enterprises and private farms in an effort to appear to comply with official sanctions limiting the frequency of planting sunflowers in the same field. Production is under-reported as well. Traditionally, farmers have under-reported sunflowerseed output in order to evade taxes, and to retain a share of the seed to be sold for cash which can then be used to purchase fertilizer, chemicals, and other agricultural inputs. Some observers suggest that the under-reporting of production may be declining because farmers recognize that export data for sunflower seed and oil can be used to verify production estimates.

The popularity of sunflowers is attributed to its high profitability. Sunflowerseed is consistently the most profitable crop in Ukraine, and by a wide margin. This is attributed to the low per-hectare cost of production and to its high demand due in part to excess domestic crushing capacity. Growers treat it as a priority crop. Yield has essentially doubled since 2003, when Ukraine began to increase its imports of hybrid seed. Other factors have contributed to the rising yield as well, including an increase in the application of mineral fertilizers. Ukraine’s fleet of agricultural machinery, especially harvesters, has also improved. The USDA estimates sunflowerseed area for 2017/18 at 6.2 million hectares, matching last year’s record level, and yield is forecast at 2.26 tons per hectare, slightly surpassing last year’s record. Output is forecast at a record 14.0 mmt against 13.8 mmt last year.

The valuable contribution of Denys Sobolev, agricultural specialist at the USDA Office of Agricultural Affairs in Kyiv, is gratefully acknowledged.  Current USDA area and production estimates for grains and other agricultural commodities are available on IPAD's Agricultural Production page or at PSD Online.

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For more information contact Mark Lindeman | | (202) 690-0143
USDA-FAS, Office of Global Analysis

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