Ukraine’s planted acreage is down about 30 percent this year, which includes losses in the area due to mine fields, according to estimates from USDA.
“One of the issues the U.S. is really struggling with is how big of a reduction in grain production Ukraine will have in 2022,” said Frayne Olson, grain marketing economist at North Dakota State University.
Those fields are unworkable because of bomb craters or debris fields, and they can’t be planted due to lack of seed and labor.
“Seed and the labor to put the crop in are two of the areas that are in short supply right now,” Olson said.
The Ukrainian ministry of agriculture has made an estimate that the fuel availability is about 82 percent of normal.
“Fuel supplies are relatively tight mainly because of the war and the war effort, and a lot of the fuel is being diverted to the military actions,” he said.
The USDA is looking at yield estimates similar to 2020.
“Most of the thought process is the reduction in production will primarily come from a loss in planted area, not necessarily a loss in yield and yield potential,” Olson said.
As the growing season proceeds and there’s a better idea of what the weather will be, the estimates will be changed and updated.
Looking at projected export levels, Olson said he had to dig through USDA reports for the export estimates. They’re estimating a 47 percent reduction in export wheat volumes in Ukraine when comparing 2021 to 2022.
“That is a pretty significant cut. Ukraine may be able to produce a crop, but are they actually going to be able to get it sold and shipped?” he said.
The other export number that impacted the corn market in May is the reduction in corn exports. Ukraine was the fourth largest corn exporter on the globe before the war.
“Since the war started, the major change is that there is a 61 percent reduction in corn exports. That is a very heavy reduction, so where is that additional corn going to come from is really an open-ended question,” Olson said.
Olson also checked on sunflower oil exports because the “vegetable oil market right now is really very hot.”
“We’re seeing some very large or high global, as well as domestic, vegetable oil prices,” he said.
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The USDA is forecasting an almost 20 percent reduction in exportable stocks or exportable ability for sunflower oil.
There are also some maps prepared that are overlaid with where the current military action is relative to where the crop is being produced.
“When we look at total planted area, the USDA noticed Ukraine is forecasting about 4 million hectares. That is a slight reduction in their ability to both plant and harvest,” he said.
The other interesting thing is: where are the port facilities that can have the ability to be able to load and transit for grains? Recently, the European Union (EU) notified Ukraine it would help with transporting grain out of the country, according to the EU.
Ukraine has winter wheat that was planted last fall. The corn is produced further north in the country, and sunflowers are produced in the central part of the country.
“The challenge is not going to be necessarily the yield portion of it, but it’s going to be the planted area and the ability to export those crops,” Olson said.
There are areas in Ukraine that are currently being impacted with active military action.
“There are other areas that are being seeded and farmed as normally as possible,” he said.
Are the production estimates for Ukraine optimistic?
“I do think they are a bit optimistic, but I think that the forecast for planted acreage will be reasonably close to actual planted acreage,” Olson said.
The forecast for yields out of Ukraine were a little bit lower than average.
“The production estimates are an optimistic number. In order to get the kind of yields that you typically would get means that there has been fertilizer applied, that producers have been able to be timely in their field operations for spraying, for weed control, and disease control, and they have been timely in their ability to harvest their crops,” he said. “I’m not sure that the Ukrainians are going to have as much flexibility in some of those field operations.”
In addition, the pace of old crop exports is relatively slow right now, and that is raising concerns.
“There’s still a lot of grain in storage, so a lot of their grain bins are full right now with old crop grain,” Olson said.
As the new crop wheat starts hitting the market, there are questions about whether they will have enough available storage capacity to handle both the new winter wheat crop and the corn crop, as well as some of the minor oil seeds as they come online.
“I think there will be questions about not only yields and production, but also how much of that is going to be a marketable product. How much is going to be actually harvested? Will it spoil? Are we going to see some more harvest loss?” he concluded.