Tendencies of Ukrainian agrarian market in September 2019.

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Traditionally, representing to your attention a brief overview of the world and Ukrainian agrarian sector news.

Timofey Milovanov was appointed for Minister of Economic Development, Trade and Agriculture of Ukraine. Prior to his appointment, Milovanov served as deputy head of the Council of the National Bank of Ukraine. In 2014, Ukrainian Forbes included T.Milovanov in the Top Economic Thinkers rating.

Spring wheat prices in the USA are at their lowest level for the last 10 years, while seller pressure has increased due to the remaining volumes of the previous crop. According to the report, prices for corn and soybeans slightly increased, traders are careful in case of early frosts. Analysts emphasized that US farmers are waiting for specific steps from President Donald Trump to support the corn market.

The first supplies of sunflower to elevators and enterprises of Ukraine demonstrate low quality in terms of oil content (below 46%), which is reflected accordingly in procurement prices. Experts note that the companies that announced the expected high purchase prices before harvesting started, reduced them by 250-500 UAH/t, when there was an understanding of the quality of incoming oilseeds.

In August, the average value of the FAO Grain Price Index was 157.6 points, which is 6.4% (10.8 points) lower than in July and 6.6% (11.1 points) lower than the corresponding period last year. According to the FAO report, the downward trend in wheat prices remains, the determining factor of which is large volumes of export supply and, consequently, increased competition between the main exporters. In addition, corn quotes also plummeted in August, primarily due to expectations of a much larger than previously expected crop in the United States, the largest producer and exporter of corn.

Demand for Ukrainian corn is almost absent. Low corn prices are holding back trade, market operators say. Although corn is available on the market, there is virtually no external demand. Export quotes for corn on the basis of FOB Odessa are at the level of $ 154-157 per ton. According to the report, corn quotes on the basis of CPT Odessa are at the level of $ 144-147 per ton. Analysts also note that some companies report the closure of barley and wheat programs, while they are waiting for corn to go on sale. At the same time, from the beginning of 2019/20 MY, as of September 20, 2019, Ukraine exported 1.95 million tons of corn, which is 530 thousand tons (38%) more than the same period last year.

In Ukraine, a sharp decline in prices for grains and oilseeds was recorded with the start of harvesting of the late crop group. However, part of the products was sold under forward contracts in the fall and summer at fairly high prices. According to the report, forwards for corn reached $ 180 per ton, which contrasts sharply with the price on the foreign market and traders will try to recoup, partially diluting the volumes with raw materials at lower prices. It is to be expected that prices will stabilize over the course of a month, since defaults with delivery to expensive forwards can free up funds for a more relaxed purchase. Export quotes for Black Sea wheat rose slightly last week on the background support from the September USDA report and currency appreciation. The appreciation of the ruble following the increase in oil prices, as well as the strong hryvnia exchange rate, supported supply prices for Ukrainian wheat with protein of 11.5% to $ 185-186 per ton compared to $ 183-184 per ton earlier on the FOB basis.

The rent for agricultural land in Ukraine exceeded the price level for some European Union countries. This was announced by the Deputy Director of the National Scientific Center “Institute of Agricultural Economics”, Doctor of Economics Olga Khodakovskaya. “At present, the average annual rent for agricultural land in Ukraine for state-owned lands has reached € 120 per ha, private – € 100-105 per ha ….” Thus, the imputations against renters that they pay a «meager» rent are not always justified. According to the report, every year the average rent in Ukraine is growing, and the forms of its payments and calculation conditions are improving.

The Ukrainian government has proclaimed a bill on the land market. From October 1, 2020, the ban on the expropriation of agricultural land of all forms of ownership is lifted. And to support the launch of land reform in the budget for 2020, UAH 4.4 billion has already been provided. The renters shall have the pre-emptive right to purchase a land plot. In his turn, the President of Ukraine Vladimir Zelensky said that only Ukrainian farmers and Ukrainian companies will be able to buy and sell agricultural land after the market opens. After the opening of the land market, according to rough preliminary estimates by experts, the cost of 1 ha in the first stage will range from $ 1 thousand to $ 2.5-3 thousand.

With kind regards, team of GC “Agroliga”.

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