(Agrimoney) – US officials raised doubts about ideas of a cut in Ukraine corn exports next season, saying that farmers’ hunger for financing would allow them to show a small increase, despite a drop in production.
Ukraine corn exports in 2015-16, on an October-to-September basis, will come in 18.0m tonnes, the US Department of Agriculture bureau in Kiev said in their first forecasts for next season.
That represents a small increase on the 17.5m tonnes the bureau believes will be shipped this season, and is a more generous figure than that expected by some other analysts.
The USDA’s official forecast is for Ukraine – which has since 2011-12 emerged as the world’s third-ranked corn exporter, and a growing rival to the US and Brazil – to ship 16.0m tonnes next season.
UkrAgroConsult, the respected Kiev-based consultancy, foresees shipments at 17.0m tonnes.
Forward planning
The bureau’s more generous forecast reflected in part an estimate for Ukraine corn production this year of 26.5m tonnes, ahead of the USDA’s official figure of 26.0m tonnes, and well ahead of UkrAgroConsult expectations.
Although sowings will fall, thanks to lower corn prices, yields will “remain similar” to those last year, despite the dent to prospects for imported inputs from a collapsing hryvnia.
“Most large agricultural enterprises… have purchased or signed purchase contracts with locked-in price for fertilizer, fuel, and seeds that are needed for their spring planting before the major changes in the currency exchange rate started occurring in Ukraine,” the bureau said.
Meanwhile, newly-planted corn is “generally in the good condition”, with early-spring rains leaving a “generally sufficient amount of soil moisture in the ground”, if causing some seeding delays.
‘Farmers need cash’
However, financial stricture look like proving enough to encourage farmer selling in 2015-16.
“Even though world market price for feed corn is continuing to decline, Ukrainian producers are expected to sell around 18m tonnes of the crop in 2015-16 order to return the investment and secure the funds for next season’s planting campaign,” the bureau said.
Already, this trend was being seen to some extent, with some farmers “willing to sell” despite low prices “since they need cash for the ongoing spring planting campaign”.
Ukraine corn exports to the European Union are “expected to remain strong” in 2015-16, with Spain the top buyer last season, followed by Egypt and South Korea.
The report made no mention of the exports to China which have been taking a higher profile since Ukraine in 2012 agreed, and completed, a grain-for-loans deal.
‘Controversial’ levy rise
Costs for farmers may see further pressure from a “controversial” proposal by Ukraine’s government to lift by 5-10% import duties on farm inputs.
Such increases would further raise “already-inflated prices, because of the devaluation, for the whole spectrum of seed and agrochemical products, machinery and machinery parts used in plant production”, the bureau said.
While the government has signalled it may lower these tariffs, “no action has actually been taken to date”.
