Ukraine soybean production to fall 14% in 2018-19

UKRAINE – Ukraine’s soybean production is set to fall 14% to 3.3 million tonnes despite higher expected yields than the five-year average, according to USDA’s Global Agricultural Information Network (GAIN) May 16 report.

Soybean planted area for the coming crop year is forecast at around 1.5 million hectares, a 23% decline from 2017-18.

While Sunflower and rapeseed planted areas are projected to increase for MY2018/19, soybean seed area will likely shrink due to recent changes in domestic tax policy.

The USDA forecasts sunflower seed production in 2018-19 at 15.6 million tonnes, a 16% increase over the previous year while rapeseed planted area is forecast to increase by 25% while production is projected to rise by 21% to 2.6 million tonnes.

In 2017, sunflower production reached 12.2 million metric tons, 2.2 MMT for rapeseed and soybean was at 3.9 MMT, a 9-percent decrease, harvested from almost 2 million ha.

“The main reason behind high profitability for oilseeds in Ukraine is the competition between exporters and crushers for stocks available on the domestic market. Additionally, there is significant internal competition between crushers created by excess crush capacity in the country,” said the USDA statement.

Flexibility in processing facilities allows crushers to switch between different crops depending on availability of the particular oilseeds, which helps maintain stable prices on the market.

Moderate inflation of the national currency and general macroeconomic stabilization was achieved in 2017 and stretches into 2018, positively impacting businesses for local farmers, chemical and seed importers.

Although production of Genetically Engineered (GE) crops in Ukraine is still not legally allowed Roundup Ready soybeans continue to be produced in the country, according to USDA’s Biotechnology Report.

Soybean domestic consumption in MY2018/19 is forecast to reach almost 1.7 MMT, soybean exports are forecast to drop 34% to around 1.6 MMT due to lower profitability of exports resulting from changes in domestic tax policy.

Ukraine exports soybeans mainly to the Middle East (Turkey and Iran), then European Union and Africa.

The report notes that prices for soybean meal was still the main factor influencing the ratio between soybean exports and those for processing in Ukraine, that is decreased global prices for this product usually result in increased exports of unprocessed soybeans and vice versa.

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