Estimate of corn ending stocks in Ukraine inflated: opinion

The volume of Ukraine's corn production and processing into feed in the 2020/21 season is much overestimated, the head of ARIA Commodities UKRAINE Oleg Levchenko is convinced, the APK-Inform consultancy writes.

"The majority of experts make such estimates, the official data from the Ministry of Economy reveals the same. Harvest estimates of 29-30 mln t are unfeasible, as are the large carryovers. This is due to the unrecorded actual reduction of corn sown area in Ukraine and its yields. I have been to many corn fields in different regions of Ukraine and have seen many of them ploughed as there was virtually nothing to harvest. Therefore, the harvested area was not more than 5 mln ha. I believe that in 2020/21 Ukraine will harvest a maximum of 27.5 mln t, the export will reach 22 mln t at best. This is confirmed by the official balances that are now announced," Oleg Levchenko believes.

The expert noted that the annual production of mixed feed in Ukraine is about 6 mln t, which includes apx. 2 mln t of protein group (sunflower and soybean meal), high-fibre commodities (such as barley) are added according to the formula, and the main product is feed corn and wheat in the ratio of 60-70:40-30, depending on the price situation.

Corn production in Ukraine and worldwide (click for full resolution)

Oleh Levchenko stressed that for most of the season, feed wheat was more expensive than corn, but now the situation has changed, and there is almost no feed wheat left in Ukraine. He believes that based on this if the maximum consumption of corn is assumed, it will make up 3 mln t, and, accordingly, 1 mln t of feed wheat.

"One should keep in mind that 2 mln t are produced by MHP for its own needs, while 4 mln t are produced by other feed mills, of which only 10 are large. I can assume that this 6 mln t reported by cattle farmers do not include about 1 mln t of coarse grain, which could theoretically be used by households. Feed grain consumption in Ukraine is falling. Food, too, I think, has fallen, in part because of the COVID pandemic. Out of a maximum of 7 mln t of feed consumption, the consumption of corn is 3.5 mln t. Thus, at a bulk yield of this grain crop at 27.5 mln t and taking into account all of the above and 1 mln t of industrial processing, I think that the maximum volume of corn carryovers in Ukraine in the current season could be 0.5 mln t," Oleg Levchenko concludes.

Grains ending stocks in Ukraine in the 2020/21 season may reach around 5.7 mln t, corn in particular 2.4 mln t (+51% YoY).

In its March report, USDA left the 2020/21 demand and supply outlook for corn mostly unchanged.

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