Early grain crops in Ukraine — future harvest and sales potential



The share of wheat and barley in Ukraine generally covers more than half of production of all grains and pulses. The harvest volumes of the grains provide not only the domestic market needs, but also form the significant share of the export potential of agricultural products. For several recent seasons, in terms of the changing climatic conditions and agro-technological approaches, the issues often arise regarding the qualitative figures and the production volumes. 2018/19 MY is not the exception for the market segments of wheat and barley, which will become quite interesting and dynamic period. The current article focuses on the features of forming of the grains, the available risks and selling prospects.


Features of wheat and barley seeds

APK-Inform experts often monitor and analyze the trends in usage of the basic production resources by Ukrainian agrarians. According to the polling of agricultural producers, the analysts formed the conclusion that in the segment of winter wheat (which forms more than 95% of the general wheat production) 72% of respondents use domestic seeds. In the segment of winter barley, 51% of the interviewed agrarians preferred using domestic seed material. It is noteworthy that agrarians often use their own-produced seed material with the high level of generation. According to the polling, nearly 45% of agrarians grow the same varieties of winter wheat for 3 years or more, re-using the seeds, which reduces its productivity. In the segment of winter barley, the share of such agrarians totaled 38%.

According to the polling, more than 99% of seeds of winter wheat and barley are treated before the planting works. Agrarians usually process the seeds by themselves. Only 4% of winter wheat seeds and 3% of winter barley seeds are purchased already treated from seed companies or distributors. Therefore, there can be some violations in the technology of seed treatment.


Conditions the planting campaign

As for the conditions of winter and spring crops planting for the harvest-2018, it should be noted that the weather factors made the key influence on the field work rates. In the autumn 2017, the temperature figures remained at the optimum level. At the same time, in terms of the absence of the productive precipitations, the deficit of moisture content in the soil had a negative effect on the germinating ability of winter crops. At the end of the autumn, rains managed to somewhat compensate the insufficient soil moisture, as well as the adequate level of snow covering in fields during the winter. As for the spring crops planting campaign, the time periods somewhat reduced, due to the low temperatures in March and the presence of large volumes of moisture content in the fields. Significant moisture losses in the soil due to the sharp rise in temperature in April, had its negative impact on the growth and development of grain crops, at the same time, and allowed to agrarians to complete the planting works throughout the planned areas in a short time.


Influence of the weather conditions in the main vegetation period

During the most active vegetation period of spiked grains, Ukraine faced the absence of precipitations throughout almost the whole country. The southern regions faced the most severe damages. In June 2018, agrarians often informed APK-Inform about immature and shrinked grains per spike, as well as problems with the presence of weeds and pests in the fields.

The precipitations during the harvesting campaign somewhat complicated the situation. The significant share of moisture content led to development of fungic diseases and sprouting beans. The reporting problem was most typical for northern and western oblasts, and made the negative impact on formation of the quality characteristics of grains in the country.


Preliminary results of the harvesting campaign of early grains in Ukraine

According to the statistics figures of the Ministry of Agrarian Policy and Food of Ukraine, as of August 22 agrarians already completed the harvesting campaign of early grain crops. Ukraine harvested wheat throughout the areas of 6.59 mln ha, with the average yield of 3.8 t/ha. The harvested areas of barley totaled 2.48 mln ha, and the average yield totaled 3.03 t/ha. Thus, the Ministry estimated the production of wheat in 2018 at 25.1 mln tonnes, and barley — 7.5 mln tonnes.

In 2018, the average yield of wheat decreased by 9% compared with the last year figures, and barley — down 12%. Moreover, the small-scale the growth of the planted areas (up 1% compared with the last year figured) somewhat compensated the decline of the yield, but the areas under barley decreased by 4% compared with 2017.

The uneven agro-climatic conditions throughout the country`s territory became the main reason of such yield reduction. In particular, the hot and dry weather in May and June decreased the natural weight of grains, but allowed to form the sufficiently high value of the protein complex indicators in wheat. In turn, in July 2018 various precipitations in large parts of the country formed the favourable conditions for development of fungic diseases on crops and the germination processes of grains.

Changes of the average yield of wheat and barley by the regions of Ukraine is rather heterogeneous. So, in 2018 in Donetsk, Kharkiv and Zaporizhia oblasts the average wheat yield 8 decreased by 32%, 29% and 27%, respectively. At the same time, in Poltava, Cherkasy and Kyiv oblasts the yield figures in the new season increased in comparison with the last year figures by 8%, 25% and 32%, respectively. In the segment of barley, Donetsk, Zaporizhia and Vinnytsia oblasts faced the most significant damages to the crops, where the average yield decreased by 45%, 37% and 22%, respectively. The yield increased in few oblasts only. In Sumy oblast the figures increased by 9%, in Kyiv oblast — up 5%, and in Zakarpattia oblast — up 4%.








Formation of early grain stocks

In the beginning of the season, the southern regions demonstrated more active formation of grain stocks. As of July 1 of the current season, the stocks of wheat increased by 59% compared with the last season level, and barley — up 42%. According to the State Statistics Service, as of August 1 the carry-over stocks of wheat totaled 13.1 mln tonnes, down 11% compared with last year, and covered 71% the harvested grain volumes by that time. In the segment barley, the stocks reached 2.5 mln tonnes (down 20% compared with 2017, and 67% of the general harvest as of August 1, 2018).










Sales of early grains

In the current season, the main sales directions of early grains in Ukraine will decline compared with the last year level, due to the trends in the processing industry, the quality figures of the grains, and changes in the global trade development.

As for the domestic consumption, the export segments of flour and wheat bran faced some stagnation processes, which in terms of the high prices for wheat will lead to some decrease in the volume of food grain processing. In turn, the gradual reduction in the livestock of major farm animals will cause the same decreasing in the feed consumption of wheat and barley. Therefore, in the current season the exports will remain the most interesting direction of grain sales. According to APK-Inform estimations, in 2018/19 MY the domestic consumption of wheat is expected to decrease to 9.5 mln tonnes (down 1%), and barley — to 3.5 mln tonnes (down 12%). In turn, the export potential of wheat will total 15 mln tonnes (down 12% compared with last year), and barley — 4.1 mln tonnes (down 4%).

Also, it is necessary to note some changes in the geography of wheat export trading In 2017/18 MY, Indonesia became the leader among importers, and purchased almost 2.3 mln tonnes of the Ukrainian grain, or 13% of the general supplies. Last season, Egypt reduced its purchases by 23% compared with the figure of 2016/17 MY, but kept the second position in the rating of importers. In July 2018, the supplies to Egypt continued its downward trend, and the exports to the country reduced by 35% compared with the same period of 2017.








Andrei Kupchenko, Analyst at APK-Inform Agency