Market Morsel: Ukraine Wheat and Corn Crop to Drop.
Market Morsel
SovEcon, a leading Black Sea agricultural markets research firm, has revised its Ukrainian wheat crop forecast and issued its first corn crop estimate.
Ukraine’s 2022 wheat crop estimate has been cut from 28.3 mmt to 26.0 mmt (2021: 32.1 mmt). The corn crop is estimated at 27.7 mmt (2021: 41.9 mmt).
The total wheat area is forecasted at 6.9 mln ha vs 7.1 mln ha in 2021. 6.7 mln ha of winter wheat was planted last fall. The average wheat yield is forecasted at 3.8 mt/ha (4.5 mt/ha in 2021), substantially below the trend.
Corn area is expected to drop to 4.6 mln ha from 5.5 mln ha last year. The yield is estimated at 6.1 mt/ha vs 7.6 mt/ha, also below the trend.
Yields and planting campaigns are to be affected substantially by lack of fuel, labour, fertilizer, inability to carry fieldwork in many cases. Current crop conditions for winter wheat are below average due to a lack of precipitation.
Regions directly affected by the war currently account for 40% of corn and wheat production in the country.
The forecast is based on the assumption that the majority of farmers will be able to carry out fieldwork in April, and Ukraine and Russia will reach a ceasefire agreement during the next several weeks.
Our estimates are largely based on an analogy with 2014-2015 events in Ukraine, where the country faced rapid hryvnia devaluation coupled with a war in Luhansk and Donetsk regions
Ukraine is one of the top global corn and wheat exporters, and the reduced production will have a continued impact on markets.
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