Ukraine grain harvest to fall 5%-9% yoy this year, ministry says

Ukraine’s grain harvest for the 2017/18 marketing year
will be 60.2-63.0 mmt, a decline of 4.5%-8.8% yoy from 66.0 mmt, according to
an Aug. 4 forecast produced by Ukraine’s agrarian policy ministry.

As of Aug. 4, Ukrainian farmers harvested 30.9 mmt of
early grains, an 11.7% yoy drop, at an average yield of 3.74 t/ha, a 3.6% yoy
fall. This was collected from 8.2 mln hectares, or 85% of the total acreage of
early grains.

Alexander Paraschiy: We believe
the ministry’s forecast is too conservative, given that yields of early grains
are only slightly smaller yoy, and the harvest of corn, the crop that
contributes most to total figures, has yet to start. In our view, the total
harvest decline will be in the range of 3%-4% yoy. But even such a decline will
have a negative impact on macroeconomic statistics in 2H17.

We estimate that a 4% total harvest drop in 2H17 will
shave off about 0.2pp of GDP growth for the year. If our projections come to
reality, GDP growth will be 1.7% yoy in 2017 compared to 1.9% yoy we estimated
previously.