2021/22 crop forecast. Where is margin to be looked for in the new season?

UkrAgroConsult

(Based on a webinar, Sergey Feofilov – Director General, UkrAgroConsult)

Traditionally, the distribution of planted areas is influenced by the following two factors: the current margin rate and the unpredictable effect of weather-related adjustments. This year the choice is complicated by high prices of all crops.

The 2019 margin is a key factor determining the distribution of areas for the 2020 harvest. The favorite crop among grains is corn, with sunflower being its counterpart among oilseeds. The year 2020 witnessed new favorite crops – soybean and wheat, which replaced sunflower and corn.

Apart from marginality, there are a number of fundamental factors:

• Price factor: prices of almost all commodities are the best in many years
• Competitiveness strength: high foreign demand despite the pandemic
• Regulatory factor: taxation changes
• Weather factor: dryness at the time of fall planting. Frost events of down to -25ºC amid uneven snow cover, a likely increase in winter crop losses
• The currency factor: the U.S. dollar exchange rate is up 13.5% y-o-y.

A new factor – defaults – has emerged this season.

Oilseed complex. New-season factors:

• Recovery in the crude oil market.
• High demand from China and the EU for all oilseed complex products.
• Low ending stocks of oilseeds, vegetable oils, and meals.
• Soybean production growth in the U.S. and Brazil.
• Canola production and export growth in Canada and, most likely, in Australia.
• Sunseed production growth worldwide and particularly in the Black Sea region. In case of favorable weather, the sunseed crop in all the countries will near a record high.

Sunflower oil is now still the most expensive among its counterparts. Sunflower oil price hit the highest since 2011.

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Tags: margin, planted areas, distribution, Ukraine