Basing on progress and current results of wheat harvesting campaign in Ukraine, APK-Inform raised its wheat production forecast for 2021 by 8% to the record high 31.2 mln tonnes, up 26% compared to 2020 (24.9 mln tonnes).
Production estimated are highly dependent on local precipitation in regions. Ukrhydromet center says most Ukrainian oblasts faced the amount of precipitations exceeding multiyear norms in the last four ten-day periods. Particularly, such weather conditions were observed in Dnipropetrovsk, Zaporizhia, Kirovohrad and Kherson oblasts, where 27% of wheat area is located. Current data says the average wheat yield is 15-20% higher compared to the maximal yield of the last 10 seasons. At the same time, abundant rains may raise the need to dry the grain. Additionally, there is no clear information about wheat quality now. All this can reduce the wheat production volume in weight after processing.
Higher crop can result in an increase of wheat export to 21 mln tonnes in 2021/22 MY (+26% to 2020/21 MY).
At the same time, the current export progress is slower that the last season due to the late start of the harvesting campaign. According to State Custom Service of Ukraine, since the beginning of 2021/22 MY and as of August 27 Ukraine exported 3.4 mln tonnes of wheat down 13% year-on-year.
In case of a record corn crop and no excessive demand for Ukrainian wheat, the fulfilment of this export forecast can be questionable. Therefore, high carry-over stocks can be accumulated in 2021/22 MY (3.3 mln tonnes compared to 2.1 mln tonnes in the preceding season) that will additionally pressure the prices weighted by the record crop size.
