Ukraine corn area to lose to soy, but cash shortage limits switch

Credit: REUTERS/GLEB GARANICH

By Pavel Polityuk

KYIV, Feb 21 (Reuters) - Ukrainian farmers are reviewing their planting plans for 2024 after low corn prices led to steep losses last year but their ability to switch to more profitable soybeans is limited by scarce funding, producers said.

Farmers in the southern regions in the war-stricken country have started spring sowing with barley but still have time to decide whether to sow corn, which have been generating losses of more than $50 per ton for producers.

Analysts and officials say farmers are often unable to abruptly abandon corn due to a lack of money to buy good seed of other crops and the necessary technology.

"If there will be a decrease in corn, it will be about 2-3%, hardly more. There will definitely be more soybeans, because soy is the only crop that was profitable last year," Oleh Khomenko, director with agriculture business association UCAB said.

The Agrarian Council, Ukraine's largest agribusiness group, said late last year that farmers spend $149 to grow one metric ton of corn, which they can sell for $94.

Farmers sowed about 4 million hectares of corn for the 2023 harvest but almost 320,000 hectares of them remained unharvested as of Feb. 8.

Alex Lissitsa, CEO of IMK farm holding, said the company would stay in corn.

"We'll plant the same amount as last year, no change," he said.

"Everyone is reducing (the area under) maize (corn), but we know how to grow it, so we decided that we will follow the same trajectory as we did before the war."

Ukraine's farm ministry said this month the area sown for corn could decrease 9% this year but others expected a much smaller decline.

The International Grains Council last week forecast there would be a year-on-year decline of just 1.4%.

SOYBEAN SHIFT

The shift away from corn to soybeans mirrors a similar trend in the U.S.

The U.S. Department of Agriculture forecast corn seedings of 91.0 million acres, down from 94.6 million in 2023 and soybean seedings of 87.5 million acres, up from 83.6 million last year.

Global corn prices Cv1 have fallen to the lowest level in more than three years this month with the market well supplied after a record U.S. crop in 2023.

Ukrainian corn production has risen sharply this century from just 3.8 million tons in 2000 to a peak of about 42 million in 2021.

Russia's invasion has curbed production although it remains Ukraine's largest grain crop at 30 million tons in 2023 followed by wheat at 22 million tons.

The government and analysts say the exportable surplus could total 22 million tons in 2023/24, however, export difficulties caused by the blockade of seaports and the western land border led to a sharp fall in domestic prices, which have often failed to cover farmers' costs.

The Agrarian Council said Ukraine still had about 17 million tons of corn available for exports but very low prices forced farmers to delay the sale.

"Since prices on CPT (Carriage Paid To) are so low that they make corn trading unprofitable for an average farmer, many farmers are ready to postpone corn sales until summer or even postpone them to the next season," the council said in a report.

"We are reviewing the structure (of crops). Corn is deeply unprofitable and we are entering 2024 without corn," said Svitlana Nikitiuk, the head of agricultural division of Epicentr-Agro farm holding.

The holding sowed 20,000 hectares for corn in 2023.

She said the company instead would start soybean planting with large area of 40,000 hectares and increase the acreage sown to rapeseed and sunflower.

"Absolutely all of our oilseed group we will process - this is the most profitable today. Our main vector for 2024 is to maximise the processing of what we grow," Nikitiuk said.

(Reporting by Pavel Polityuk; editing by David Evans)

((pavel.polityuk@tr.com; +380 44 2449150; Reuters Messaging: pavel.polityuk.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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