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borders will stabilize. At the same time, this year's yield is expected to decrease by approximately 4-5%. The cost of elevator services is increasing due to increased electricity prices. In addition, there is a possibility of an increase in the cost of renting land by approximately 5%, up to $125 per hectare, in connection with the opening of the land market for legal entities. Wheat cereals will have the least profitability, while corn and barley will likely remain unprofitable. However, all types of oil crops are expected to become profitable. Also, in 2024 the profitability of all livestock products is likely to fall as feed and electricity costs will grow faster than the prices of the final product. Unlike crops, most livestock products were profitable throughout 2023.
The UN’s FAO has failed to fulfill its promises to supply seeds, affecting Ukraine’s sowing campaign. The Ministry of Agrarian Policy of Ukraine and agricultural associations are unhappy with the work of the UN's representative office of the Food and Agricultural Organization (FAO) in Ukraine. Representatives of associations and small and medium-sized farmers claim that the FAO does not fulfill or implement international aid projects incompletely for war-affected regions. At the beginning of March 2024, the FAO promised to provide Ukrainian small and medium-sized agricultural producers with wheat seeds for spring sowing. Farmers have not received the promised seeds, although the spring wheat sowing campaign is already actively underway. The project to provide sunflower and soybean seeds, applications for which were accepted until March 24, has also come under question. There is no exact date for the distribution of seeds, so farmers who have counted on this assistance cannot plan their sowing. Similarly, farmers still have not received modular granaries, applications for which were submitted until January 21. The FAO has not provided any information regarding the timing of these promised deliveries.
The majority of global analysts predicted that the Special Military Operation (SMO) would last no more than 2 years; however, the consensus is now shifting towards its extension at least until 2026–2027.
Prolonged military actions could significantly impact the agricultural market, especially wheat, where both Russia and Ukraine are key producers and exporters. The global grain supply could also be affected by the reduction in planting areas in the USA. This year, farms have reduced their total area by 5%, and considering that the USA is the largest exporter of grains, any production shortfall could push the cost of grain to new heights.
Corn promises to be no less problematic this year. Even though the market supply volume is steadily increasing, its price remains at an elevated level (around $4), which is still at least twice cheaper than the 2022 peak when the price rose to $8, but it is still far from the real equilibrium state of the past decade ($1-$2).
Soybeans are expected to become the new hot commodity. Like corn, its price has been steadily falling from its 2022 peak (from $17 to $11.46), but unlike corn, the demand for it is expected to only grow this year.
Most traders are now aiming to short the market while it is in a transitional state between the 2023 and 2024 harvests. Farmers typically have short positions in the futures market, as they lock in prices for future crops to hedge against price drops. Currently, they are holding onto grain and betting on price increases. Time will tell how justified this position is.
78 UKRAINE Country Report April 2024 www.intellinews.com