Ukraine’s soybean and soybean product market: 2019/20 results and new season’s prospects

UkrAgroConsult

Soybean acreage shrank for a second straight season due to export VAT refund restrictions. Exporters outcompeted crushers in the domestic market: export share in the soybean crop grew to 59% vs 54% in MY 2018/19. Ukraine imported 46 KMT of soybeans during the season to load crushing capacities.

A domestic soybean shortage in the latter half of this season along with intensifying competition between crushers and exporters drove up soybean prices in the domestic market. In the first half of 2020, soybeans were still the most expensive oilseed and therefore a promising crop for planting in 2020.

The key constraining factors included uncertainty about lifting the soybean export VAT refund restrictions and spring moisture deficits. Spring moisture deficits gave way to critical drought in view of high air temperatures in the summer.

As a result, UkrAgroConsult expects soybean crop at 20-23% lower compared to the previous season. Domestic crush will drop considerably along with a decline in demand from the destination markets of processed products.

Since the beginning of MY 2020/21, exporters have been more competitive in the domestic market due to export price growth. The latter is fueled by the global soybean market, demand from traditional importers such as Turkey, the EU, and Egypt, and a forecast crop decline against MY 2019/20.

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