Stocks high but large fall in

IN BRIEF

SOWING: As of 27 April, farmers had planted 19,000ha of rapeseed, accounting for 57% of the expected area, AgriCensus reported the country's agriculture ministry as saying.

Sunflower sowing was complete on 1.1Mha or 16.6% of the planned area, while soya planting had advanced to 101,700ha or 8% of the 2021 planted area.

In total, 3.6M ha of oilseeds and cereals had been sown, amounting to around 25% of the forecast for spring crops, the report said.

Minister of agrarian policy and food, Mykola Solsky, had said some land would not be sown due to unexploded bombs, mines and debris in the ground.

PORTS: More than 1M tonnes of grains and oilseeds stranded on blocked ships in Ukrainian ports may be at risk of spoilage, World Grain reported on 18 April.

“There are currently 57 vessels with 1.25M tonnes of grain and oilseeds" at Ukraine's ports, farm minister Mykoa Solskyi said, with most captains unsure if there were any problems with their retention period.

RUSSIA: The deputy chairman of Russia’s security council, Dmitry Medvedev, warned that Moscow “will only be supplying food and agriculture products to our 'friends'", Reuters reported on 1 April. "Fortunately, we have plenty of them, and they are not in Europe or North America...”

Meanwhile, in a bid to protect its domestic market, exports quotas of 1.5M tonnes and 700,000 tonnes had been set for Russian sunflower oil and meal respectively from 15 April to 31 August, AgriCensus reported on 31 March. A temporary ban on sunflower and rapeseed was also be in effect from 1 to 31 April.

Stocks high but large fall in spring sunflower area

Sun

Projected oilseed production in Ukraine, 2022 (optimistic, pessimistic and average)

Source: UkrAgro Consult

A considerable fall in Ukraine’s sunflowerseed area this spring, along with lower yields due to a lack of inputs such as fertiliser, will result in a crop harvest of around 10M tonnes for the 2022/23 season, UkrAgroConsult’s ‘Black Sea Grain – Conflicting Supply and Demand’ webinar heard on 6 April.

Sergei Feofilov, director general of the Ukrainian consulting agency, told the webinar that the country’s suflowerseed region was situated in the eastern, northern and southern parts of the country where military activity was very high, following Russia’s invasion of Ukraine on 24 February. He stressed that it was very difficult to make accurate forecasts but based on the situation as of 6 April, the 2022/23 sunflowerseed harvest was likely to total around 10M tonnes, against a record 16.5M tonnes in 2021/22.

However, Ukraine was now holding a record 6.5-7M tonnes of sunflowerseed stocks because the overwhelming majority of crushers had ceased operations and there were limited export routes out of the country, with sea ports blocked.

Total sunflowerseed supply by the start of the 2022/23 season in September could, therefore, end up at an average level of 15-16M tonnes.

Feofilov said lack of fuel was the most critical factor for farmers, along with low fertiliser supply. Farmers were also short of the revenue they normally gained from selling their grain and oilseed stocks in February/March to buy inputs.

Feofilov estimated that around 44,000ha of sunflowerseed, 11,000ha of rapeseed and 12,000ha of soyabeans would be sown this spring, resulting in 10.5M tonnes of sunflowerseed, 2.9M tonnes of soyabeans and 2.9M tonnes of rapeseed.

In terms of export logistics, Feofilov said mid- and small-sized exporters were the most promising partners as they could switch more quickly to rail and truck alternatives.

In 2020/21, Ukraine was the top global exporter of sunflower oil, accounting for 47% of exports, followed by Russia (29%), and Argentina, the EU and Turkey (around 6-7% each).

From 96% of Ukraine’s grain, oilseeds and vegetable oil normally being exported by sea, the situation had now changed to 70% by rail and 30% via the only two ports currently operating – Reni and Izmail on the Danube River.

However, Feofilov said the capacity of the two Danube ports was small compared with the major ports of Odessa and Mykolayiv on the Black Sea and Mariupol on the Sea of Azov. Other possible routes for grain, oilseed and vegetable oil exports were via railway to the ports of Gdynia and Gdansk in Poland and Constanta Port in Romania.

Feofilov said it was important to increase exports as domestic stocks were unusually high, which could create a problem if exports remained blocked and new crops arrived in July for storage.

Rail transport half of potential capacity

Rail transport of grains in Ukraine increased in April but still only reached 55% of potential capability, AgriCensus reported from the Kyiv-based Trend and Hedge Club online grains meeting on 20 April.

Up to 320,000 tonnes of grains were exported by rail between 1-19 April, Valerii Tkachov, Ukrainian railways deputy director, commercial department, told the webinar. This compared with 415,000 tonnes exported during March.

At full capacity, Ukraine’s rail system could handle around 3,422 carriages/day. With each carriage moving around 65 tonnes, that meant the service could deliver around 222,000 tonnes/day. Of the total running stock, around 731 wagons could handle grain, giving a maximum capacity of just under 50,000 tonnes/day or around 1.5M tonnes/month, Tkachov said. However, only 55% of the total rail capacity was currently being used, with grains comprising 39% of that figure.

Difficulties were arising on the European side of the border as there were only four to five terminals that offered smooth logistics, AgriCensus wrote. These were Izov-Grubeshiv (on the Polish border), Vadul-Siret-Dornesti and Dyakovo-Halmeu (Romanian border) and Mohyliv-Podilskyi-Velchynets (Moldovan border).

Carriages were queuing, with some reporting delays of over 20 days. There was also a huge deficit of available carriages on the EU side, and different widths on Ukrainian and European rail tracks, Tkachov said. Road freight export remained very small as most operators did not have the required licences and trucks did not meet EU standards, he added.