German imports of oilseeds from Ukraine down 49%.
The war in Ukraine has limited the country’s export opportunities significantly. However, not all commodities from the 2021 crop came to Germany in lower quantities because of this.
Russia’s invasion in Ukraine and in particular the blockage of Black Sea ports have capped export volumes noticeably. In particular, bulk commodities such as wheat and rapeseed, of which millions of tonnes are normally exported, have been leaving the country only sporadically since the beginning of the war, according to research conducted by Agrarmarkt Informations-Gesellschaft (mbH).
According to recent information published by the German Federal Statistical Office, Germany imported around 113,768 tonnes of oilseed crops from Ukraine in the first four months of the year 2022. This was down just less than 49 per cent on the period January through April 2021.
The sharpest decline was recorded for rapeseed shipments. At 56,579 tonnes, they were just less than 72 per cent short of the previous year’s volume. However, in previous years, Ukraine’s share in German rapeseed imports for processing was comparatively low at 10 per cent.
Also, Ukraine delivered around 53,815 tonnes of maize to Germany in the first four months, which was 46 per cent less than in the 2021 reference period.
The picture was different for products of which smaller batches had generally been exported already in the past. More specifically, the amount of GMO-free soybeans Germany received directly from Ukraine between January and April almost tripled to 51,707 tonnes in 2022.
Contrary to what some market participants feared, shipments of sunflower oil, which amounted to 43,261 tonnes, also exceeded the previous year’s volume, of 36,942 tonnes, by 17 per cent.
The Union zur Förderung von Proteinpflanzen e.V. (UFOP) believes that considerable losses could be possible in the imminent harvest. Although a large part of the Ukrainian cropland could be kept under cultivation, many crops could not be fertilised and maintained on schedule or sufficiently.
Some regions are experiencing a shortage of diesel fuel and also storage facilities, because last year’s crop could not be marketed. The UFOP has therefore welcomed the multiple initiatives of the trading sector and EU member states to provide support within the scope of possibilities, even though in terms quantity, exports transported by freight trains can by no means replace exports by ships.
It remains to be seen whether, and to what extent, the land can be harvested and tilled for the next sowings as usual. The UFOP is therefore watching the rapeseed harvests in Canada and other countries with some anticipation as to the extent to which they can offset the likely absence of supply from Ukraine. This question also applies to all oilseeds, sunflower oil and wheat.
Over the past weeks, producer prices of rapeseed and wheat fell from their plateau level, following the weakening trend on the futures markets.
Price quotes for rapeseed on the futures markets dropped from their record high as they came under pressure due to prospects of a larger crop in Europe and waning buying interest.
The harvest start in France also weighed price quotes down and sent cash market prices sliding. More specifically, the average price for old-crop batches reported at the end of June was EUR 783 per tonne.
This was up around 65 per cent on the same time the previous year, but down EUR 200 per tonne from the record of EUR 983 per tonne reached in April 2022. Prices asked for the rapeseed crop that is about to be harvested also declined sharply recently.
The average price of EUR 710 per tonne asked at the end of June was EUR 116 per tonne short of the record high of EUR 826 per tonne seen in April.
Spot prices for soft wheat also eased due to the forthcoming harvest, although yield prospects were clouded due to regional drought and extreme heat throughout Europe. In other words, asking prices plummeted EUR 38 per tonne, or 10 per cent, within five weeks.
In some regions, price reductions caused producers’ interest in forward contracts to perk up.
With a view to the development of prices outlined above, the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has pointed out that a major portion the crop was already contracted at lower prices in the previous months.
The association has underlined this factor, because the public debate on the question of market supply and the prices at which it takes place is frequently guided by the maximum prices rather than the prices at which the produce is, or was, actually marketed.
The UFOP has added that the development of farmers’ production costs, especially fertiliser costs, should also be borne in mind.
Consequently, a higher level of producer prices is necessary now, and likely will be in the future, to cover costs, because prices for energy, especially natural gas as a major energy source for fertiliser production, cannot currently be expected to decline.
According to the association, consumers should gear themselves up to such higher price level. The UFOP has pointed out that due to reductions in fertiliser use and the impact of climate change, agricultural output is currently not expected to grow, especially because the new general conditions of the reform of the European Common Agricultural Policy (CAP) do not provide for any potential for development.
In its latest monthly report, the USDA raised its global harvest estimate and foreign trade forecast for soybeans for 2022/23.
According to the USDA estimate, global soybean production in the marketing year 2022/23 is set to reach 395.4 million tonnes. This is up 680,000 tonnes on the previous month’s estimate and up 12.3 per cent from 2021/22.
The key reason for expectations of a bumper crop was prospects of increased soy supply in Ukraine, although forecasts from this region should be viewed with caution due to the continuing war.
The USDA expects Ukrainian soybean production at around 2.8 million tonnes, which would be 500,000 tonnes more than previously expected, but nevertheless 1 million tonnes fewer than 2021/22.
The estimates for Brazil and Argentina remained unchanged from the previous month at 149 million tonnes and 51 million tonnes respectively.
In view of the larger supply of soybeans, 2022/23 world trade is also expected to significantly exceed the previous year’s volume. More specifically, the USDA put exports at 170.3 million tonnes, up 420,000 tonnes from the May forecast and 9.2 per cent from the level in 2021/22. Above all, the figure of the Ukrainian export potential in was raised.
As a consequence of higher yields, the USDA revised Argentine soybean output 2021/22 upward 1.4 million tonnes to 43.4 million tonnes. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the same applies to Brazilian production in 2021/22.
Currently forecast at 126 million tonnes, Brazilian soy production is seen 1 million tonnes higher than in the May forecast.
The upward revision was due to a larger soybean area in Mato Grosso. World soybean production in the running 2021/22 marketing year is projected at around 352 million tonnes, which would be 2.6 million tonnes more than previously expected.
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Unexpected deliveries from Ukraine, June 27, 2022
