Adverse Weather in Ukraine’s Oilseeds Primary Growing Areas, a Concern for Grains and Oilseeds Production

Extensive rainfall and wetter conditions swept through the area north of the Black Sea, coming with its thunderstorms in most cropping areas in Ukraine earlier on in the month. In the eastern areas of the country toward the central district of Russia, precipitation averaged 10 to 60 mm, enabling soil moisture levels for oilseeds and summer crops. In the southern and southwestern oblast regions, however, the impact was lesser as planting started early and was quite advanced when the rains came. The long-term average (LTA) rainfall mentioned hitherto, although good for soil moisture conditions, has slowed fieldwork to a significant degree.

Rainfall just before planting in late February and March is normally welcomed as it creates perfect conditions for crop seeding. However, late rains in the middle and towards the end of planting have been a cause for concern this season. Prospects of an excellent planting thus lie in the balance, with sowing rates now lower than previously thought.

A recent report from the Ukrainian Ministry of Agrarian Policy stated that as of May 4, in areas under the control of Ukraine, sunflower, soybean, and other grains have seen lower planted areas compared to progress this time last year. Soybeans planted area has fallen by 94% from 335.5 to 173.6 thousand hectares. Sunflower, Ukraine's chief oilseeds crop, has also seen a 62% decrease in planted acreage from 2.399 thousand hectares in 2022 to 1.485 million hectares this year.

Corn, oats, millet and buckwheat also saw a decrease in the planted area. Millet fell by 9.8 thousand hectares to 8.4 thousand hectares this year. Oats planted areas now stand at 132.2 thousand hectares, down 21.3 thousand hectares YoY, while buckwheat also fell 9.8 thousand to 8.4 thousand hectares. Corn finished the grains pack with 0.917 thousand hectares falling to 1.059 thousand hectares this year.

The weather is, however, expected to recover to normal levels, which should see a continuation of planting and, hopefully, a recovery. News of any recovery would benefit the oilseeds market, giving some confidence to sellers or buyers who hedged off excellent planting. Exporters to the EU similarly will welcome any positive news coming out of Ukraine on the back of the expected continued growth in exports to the EU.

Also, the latest reports suggest the disposal of Ukrainian sunflowers has been strong: farmers heavily sold their available stocks, although prices are low, which should push farmers to complete plantings with the expectation of a good harvest in September.

Looking ahead, the development of the weather would be key, likewise, production in Europe, which would be followed keenly to establish how tight or loose the supply and demand picture of these two trading partners turn out. Buyers of the oilseed or oil may do well by taking some cover of their exposure well into the end of the H2- 2023 to hedge against any price hike.