Agricultural weekly report for the 12th week of 2022: pay attention to the progress of spring sowing in Ukraine

Core view

The war is not over, and the global bulk rally continues. Russia and Ukraine are important producers of wheat and corn in the world. The conflict between Russia and Ukraine triggered Shenzhen Agricultural Products Group Co.Ltd(000061) supply and trade risks, resulting in the rapid rise of bulk Shenzhen Agricultural Products Group Co.Ltd(000061) prices. Since the conflict on February 20, the closing price of CBOT wheat futures has increased by 39% and that of corn by 15%. In addition, Russia and Ukraine are the main producers of sunflower seeds, oil and meal. The conflict between Russia and Ukraine triggered global concerns about oil supply. In February, the global price of sunflower oil reached US $1472 / ton, up 7% month on month. The price of its substitute soybean also rose. Since February 20, the closing price of CBOT soybean futures has increased by 7%.

With the advent of spring sowing, the risk of crop yield reduction in the war zone has further expanded. In April, spring wheat, corn and sunflower in Ukraine ushered in the sowing season. The conflict between Russia and Ukraine will have a great impact on spring crops in Ukraine. Especially for sunflowers, a large part of the fighting is concentrated in sunflower planting areas, resulting in a sharp decline in production. According to the prediction of sovecon, apkinform and other institutions, the harvest area of Ukrainian sunflower in 2022 is expected to be 4.4 million hectares, a year-on-year decrease of 38%, and the output is 9.6 million tons, a year-on-year decrease of 45%. In addition, the corn harvest area is expected to be 4.6 million mu, a year-on-year decrease of 16%, and the output is 27.7 million tons, a year-on-year decrease of 34%. In terms of wheat, due to the small proportion of spring wheat in Ukraine (about 5%) in the overall output of wheat, the yield reduction of wheat is low. It is expected that the harvest area will be reduced by 7% to 6.9 million mu and the output will be reduced by 21% to 26 million tons. The above prediction is based on the ceasefire agreement reached between Russia and Ukraine in the next few weeks and the premise that most farmers can go to the fields in April. If the war does not stop, Ukraine's crop output may deteriorate further.

Risk tips

Shenzhen Agricultural Products Group Co.Ltd(000061) price fluctuation risk, epidemic risk, policy risk, industry competition and product risk

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