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Ukraine cuts 2021-22 wheat output estimate, export pace increasing

Highlights

2021-22 wheat output view cut to 31.55 mil mt

Wheat sowing at 3.1 mil hectares as of Oct 5

Exports so far at 9.4 mil mt, down 5% on year

Ukraine's agriculture ministry on Oct. 6 cut its wheat output projection for marketing year 2021-22 (July-June) to 31.55 million mt from 32 million mt pegged earlier.

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In MY 2020-21 the country harvested 25 million mt, the ministry said.

The likely decline in the output is primarily due to a drop in the estimated area seeded to wheat plantation, traders said. For MY 2021-22, Ukrainian farmers are expected to sow wheat over 6.68 million hectares against 7.10 million hectares in the previous year, according to the ministry.

Farmers in Ukraine have sown winter wheat across 3.07 million hectares as of Oct. 5, or 46% of the projected area MY 2022-23, the agriculture ministry said on Oct. 6. As of Sept. 27, winter wheat was sown across 1.95 million hectares.

"The long-term average winter wheat planting time frame in Ukraine usually starts from mid-August. However, with the changing climate, farmers are shifting winter drilling a few weeks later, when the average precipitation is higher and temperature regime still allows crops to develop sufficiently prior to dormancy," S&P Global Platts Analytics had said in a report earlier.

According to Platts Analytics, Ukraine is likely to harvest 31.2 million mt of wheat in MY 2021-22.

The US Department of Agriculture has pegged Ukraine's wheat output in MY 2021-22 at 33 million mt, up from 25.4 million mt in MY 2020-21.

Exports gathering pace

According to State Customs Service, Ukraine exported 9.4 million mt of wheat for MY 2021-22 through Oct. 6, down 5% on the year. Until the previous week, wheat exports were 7% lower on the year.

The agriculture ministry has increased its wheat export forecast to 24.5 million mt from 23.8 million mt seen a month ago. In MY 2020-21, Ukraine exported 16.6 million mt of wheat.

Ukraine's wheat exports have been gathering pace over the past few weeks as the rising tax on Russian wheat exports was hampering its purchase, traders said.

"With the higher export tax in the neighboring Russia, Ukrainian wheat is becoming more competitive on the market, which will further speed up the country's export pace," Platts Analytics added in the report.

Platts Analytics has projected Ukraine to export 22.5 million mt of wheat in MY 2021-22.

Export prices rising

Export prices of Ukrainian wheat, too, have increased sharply over the past fortnight as demand for the crop has been rising due to more competitive prices, traders said.

Prices of Ukraine's wheat have increased over 4% during the last month as Russia increased its export tax on wheat substantially.

According to S&P Global Platts data, the FOB prices of Ukrainian 11.5% protein wheat were assessed at $304.25/mt on Oct. 6, up $3/mt from Oct. 5.

The export prices have been increasing in line with the increase in the pace of exports from Ukraine.

At the beginning of September, the year-on-year lag in Ukraine's wheat exports were at 13%. As of Oct. 6, the lag closed to 5%.