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2.0 Politics
2.1 Ukraine’s 2019 harvest biggest in 20 years
Ukraine’s 2019 harvest sets 20-year record high of 75.1mn tonnes.
Ukrainian farmers harvested a total of 75.1mmt of grains (7.2% higher y/y) from 15.3mn ha in 2019, while the average crop yield increased 3.8% y/y to 4.9 t/ha, according to State Statistics Service data published on February 3. Farmers harvested 28.3mmt of wheat (15.0% more y/y) from 6.8mn ha (3.0% more y/y) with an average yield of 4.2 t/ha (up 11.7% y/y) in 2019. Total corn harvest rose 0.13% y/y to 7.2mmt from 5.0mn ha (9.2% more y/y) with an average yield of 7.2 t/ha ( 8.3% lower y/y).
Also, farmers harvested 15.3mmt of sunflower seed (7.7% more y/y) from 6.0mn ha (3.4% less y/y) with an average yield of 2.6 t/ha (up 11.5% y/y). Soybeans output slid 17.1% y/y to 3.7mmt with an average yield of 2.3 t/ha (11.3% lower y/y) in 2019. Rapeseed output surged 19.2% y/y to 3.3mmt, harvested from 1.3mn ha (22.7% more y/y) with an average yield of 2.6 t/ha (3.0% decrease y/y) in 2019.
“The 2019 harvest results are a record high for the last 20 years, making a significant contribution to 2019 GDP and will have had a positive influence on the 1H20 trade balance. Also, the robust sunflower seed harvest will support margins for sunflower oil producers like Kernel (KER PW), but the lower soybean harvest could partly offset that,” Andriy Peredrey of Concorde Capital said in a note.
2.1 Inflation crushed in 2019, set to fall further in 2020
The National Bank of Ukraine (NBU) covered itself in glory in 2019 by not only controlling inflation, but absolutely crushing it. And more of the same is in store for this year: consumer inflation will be below target range in 2020 the NBU said at the start of February.
The NBU disclosed more details of its January decision to cut its key policy rate by 2.5pp to 11.0% in its minutes of the monetary policy committee meeting published on February 10. It revealed that committee members unanimously agreed to review the forecasted trajectory of the key policy rate in favour of more intense monetary softening.
The committee members noted that fundamental inflationary pressure is weakening faster than expected. At the moment of the meeting, the consumer inflation in January dropped below the target range of 4-6%, according to NBU estimates. The effect of hryvnia appreciation in 2019, coupled with relatively low prices for energy resources and expected higher production of fruits and vegetables, should restrain price growth this year, keeping inflation below target range, the NBU expects.
Six out of ten committee members spoke for cutting the key policy rate by 200 bps to 11.5%. They emphasized that growth in consumer demand will stay high, being stimulated by accelerating wages and much “deferred consumer demand” related to the crisis of 2014-2015. The aggressive lowering of the key
5 UKRAINE Country Report March 2020 www.intellinews.com
