Gross harvest of sunflower in Ukraine in the 2017/18 season will be significantly less than in MY 2016/17. As reported by the USDA in the updated review (Ukraine: Oilseeds and Products Annual), the production volume of the oilseeds in the new season is forecasted at the level of 11.2 MMT, which will be lower than the record result of the current marketing year by 20%.
This forecast is based on the assumption that the crop area under cultivation in the next season will roughly correspond to the value of MY 2015/16, that is, 5.1-5.2 million ha. It should be noted that the acreage under sunflower in Ukraine remained quite stable over the past five years and fluctuated within 5.0-5.3 million ha range. However, 6.3 million ha were sown under the harvest of 2016, which was the key factor that ensured a record harvest, reaching, according to various estimates, 14.0-14.1 MMT. According to USDA, Such vast areas were planted with sunflower, largely because many Ukrainian farmers preferred to cut winter wheat crops sowings in autumn 2015, both to maintain domestic prices and because of unfavorable weather conditions. Thus, it is argued that the crop area has already reached its optimal level determined by the crop rotation processes and is likely to remain stable if the global or domestic demand for the sunflower and its processed products won”t be sharply fluctuating.
It should be noted that according to the estimates of ProAgro, sunflower fields under sunflower in MY 2017/18 are not expected to be significantly decreased. High trading activity on the market, significantly increased volumes of both internal and external demand for sunflower in the season MY 2016/17 shows that the market effectively “absorbed” additional supply volumes that were formed this season due to a record oilseeds harvest. Thus, the sowing areas under sunflower in 2017/18 season, in our opinion, will amount to 6.1-6.3 million ha, while the gross harvest will reach 13.8-14.1 MMT.
At the same time, production volumes can be increased through the use of more advanced hybrids of agricultural crops and the introduction of improved agricultural technologies. Given that these ways of optimizing production are becoming more common, the forecast of gross charges for MY 2017/18 is slightly higher than the average value of the last five years. The forecasted value is also a subject to revision in the future taking into account, in particular, the weather conditions.
It is worth to emphasize that the increase in the supply of raw materials, combined with the high trading activity on the market, stimulate the growth of production capacities in the processing of oilseeds in Ukraine. Thus, the average annual capacity of enterprises specializing in processing sunflower according to the latest data as of 01.03.2017 amounted to 14.46 KMT against 11.93 KMT for the same period of the last year. The cumulative indicator for all enterprises involved in the processing of oilseeds for the year increased from 16.24 KMT to 18.42 KMT.
