Oilseed Market Analyst
Ukraine’s agribusiness stays resilient during the power outages
Last week (Nov 21-25) was very difficult for Ukrainian business, particularly agricultural business. Ukraine faced the longest outages of electricity, communications, the Internet and other benefits of civilization since March. Power outages blocked the operation of the sea grain terminals and also complicated railway deliveries. However, the agricultural market continues operation and effectively finds reasons for optimism. For example, corn prices have increased, which will lead to the growing corn profitability and encourage harvesting and expansion of corn areas in 2023 spring.
World corn production has declined since 2021, although it remains high enough. Ukrainian corn export to China has become much more complicated after March 2022. China is now actively switching to buying Latin American grain. However, Ukrainian deliveries to China continue little by little.
China also very actively imports oilseed meal. In terms of the number of ships, sunflower meal can compete with corn. In September-November, 15 vessels with sunflower meal went to China through the grain corridor.
More profitable oil crops have been harvested almost completely. Some of the sunflower seed areas have suffered from moisture, but higher prices/profits cover drying and cleaning costs not like in the case of corn.
Sunflower meal and oil, are exported at a rapid pace. According to UkrAgroConsult estimates, the export potential of Ukrainian sunflower oil is 4.3 M mt in the 2022/23 MY. The key factor for the export of these 4.3 M mt remains the operation of the “grain corridor”. The risks still remain quite significant, but the export pace during the first months of the 2022/23 season gives hope sunseed oil and meal exports are possible at the estimated volumes.
A reduction in the sunflower harvest from 2021 (-33%) will lead to probability of Ukraine loss of its top position in the global ranking of sunflower oil exporters. Ukraine has been first in the rate for many years. However, there is a very good chance that the loss of the top player position will be short-term. A comparative analysis of profitability shows that for the 2023 harvest, farmers highly likely give preference to oil crops sowing. At the same time, the planted area will expand in the more productive regions of Ukraine, this explains optimistic forecasts of the 2023 harvest. By the way, UkrAgroConsult intends to announce some first forecasts for 2023 in its new Video Market Outlook ‘Black Sea as a Global Change Maker: 2022-23 Outcomes & Prospects’ to be released on December 8. Stay tuned.
Full version of the article is available to subscribers of ‘BLACK SEA VEGOIL’ Weekly Report by UkrAgroConsult.
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