Corn To Drive Long-Term Export Growth


BMI view: We see downside risks to our 2013/14 wheat production forecast for Ukraine as heavy rains across most of the country substantially delayed the harvest. On the other hand, we maintain our corn production forecast at 24.0mn tonnes in 2013/14 ( another record ) , which will push grain exports higher, in spite of disappointing wheat output. This will limit the ongoing decline in the tonnage volume out of the country's main ports. Over the long term, we expect throughput and the value of the country's agricultural exports to improve significantly.

We see downside risks to our 2013/14 wheat production forecast for Ukraine as heavy rains across most of the country substantially delayed the harvest. We forecast wheat production to rise to 19.5mn tonnes in 2013/14, from 15.7mn tonnes in 2012/13. However, local industry sources are now concerned that production will fail to reach 15-16mn tonnes unless the harvest gathers pace very quickly over the coming weeks, and provided the damage made to the crop is only minimal. A recent shift in the weather towards warm and drier spells in October have given hope that an acceleration in the harvest could limit losses for 2013/14, but uncertainty remains over the actual production growth potential for the wheat crop this season.

We maintain our corn production forecast at 24.0mn tonnes in 2013/14 as we believe recent weather patterns could be actually beneficial to the corn harvest, which occurs later in the year than the wheat harvest (from September instead of from June). Our 2013/14 corn forecast implies a 14.0% increase in output on the 2012/13 level, which was already at a record high. We have revised up our long-term forecasts for the country's corn production and now expect output to grow to 25.4mn tonnes by 2016/17. This will come from increased investment in the crop, especially from large seed manufacturers such as Monsanto, which announced plans to pump US$150mn into building a seed production facility, and Dupont Pioneer, which started production at a US$40mn seed plant. This will ensure continuous progress in yields, as Ukrainian yields are still lower than other large producers (at 6.0tonne/ha, compared to 9.75tonne/ha for the US).

More Room For Yield Increase
Ukraine - Corn Area Harvested ('000 ha) LHS & Yields (tonne/ha)

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This article is tagged to:
Sector: Agribusiness, Shipping
Geography: Ukraine, Ukraine, Ukraine, Ukraine

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