Recently Released Market Study: Ukraine Agribusiness Report Q4 2012

New Food market report from Business Monitor International: "Ukraine Agribusiness Report Q4 2012"

by Bill Thompson

(WireNews+Co) - Boston, MA - 22 October 2012

BMI View: We have revised our forecasts for 2012/13 wheat production in Ukraine to take into account damage caused by extreme weather during plantings. We maintain our subdued outlook for corn production and see limited export capacity for grains in 2012/13. Dairy companies seem to be faring better thanks to lower raw milk prices, but we remain pessimistic about the prospects of the cheese industry in the medium term as quality standards have not significantly improved. The poultry industry is still dominated by prospects of sales to the Russian market, and the recent investment of Russia in the pig industry confirms our view for the Ukrainian pig industry to be much more attractive than the beef industry.

Key Forecasts

- Wheat production growth to 2015/16: 28.6% to 21.7mn tonnes. We expect improving technology and yield gains, as well as greater export demand, to drive up wheat production.
- Poultry consumption growth to 2015/16: 23.8% to 1.0mn tonnes. We believe further growth in consumption will result from the substitution of poultry for more expensive pork and beef.
- Milk production growth to 2015/16: -2.5% to 10.8mn tonnes. A lack of access to export markets has disincentivised farmers who hoped to boost production. Furthermore, changes to the subsidy system effective from the start of 2011 have forced smaller producers out of business, which is likely to limit production growth in the coming years.
- 2012 real GDP growth: 2.5%, down from 5.1% in 2011. Predicted to average 3.2% from 2011 to 2016.
- 2012 consumer price inflation: 5.3% average, down from 9.1% in 2011.
- BMI universe agribusiness market value: 16.4% year-on-year (y-o-y) increase to US$19.9bn in 2011/12, forecast to grow on average 2.4% annually between 2010/11 and 2015/16.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/456381_ukraine_agribusiness_report_q4_2012.aspx) (http://www.fastmr.com/prod/456381_ukraine_agribusiness_report_q4_2012.aspx)

Industry Outlook

We have revised down our 2012/13 forecasts for wheat production in Ukraine and Kazakhstan because of unfavourable weather conditions in both countries. We now forecast production in Ukraine to fall 40.9% y-o-y to 13.0mn tonnes in 2012/13 because of a lack of rainfall during plantings. The country also was affected by dry, cold spells during the early months of plantings and later by warm weather accompanied by insufficient rainfall. This has resulted in significant losses in both area harvested (despite plantings at the same level as in 2011/12) and yields. The US Department of Agriculture forecasts area harvested to fall from 6.7 hectares (ha) in 2011/12 to 5.3ha in 2012/13 and yields to decrease from 3.3 tonne/ha in 2011/12 to 2.4 tonne/ha in 2012/13.

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