Daily monitor

As of October 22, Ukrainian sugar refineries had produced about 0.6 mln metric tons of sugar in 2009. The sugar content of the beets and the sugar yield are 16.82% and 13.6%, respectively, which are higher than the figures for last year. The Ministry of Agrarian Policy of Ukraine forecasts the production of sugar from the 2009 beet harvest at 1.5 mln metric tons. In comparison, 1.574 mln metric tons of beet sugar were produced from the beet harvest in 2008.

Seven oblenergos have reported on their financial results for 3Q09, including CHEN UZ, CHON UZ, KION UZ, VOEN UZ, ZAON UZ, ZOEN UZ, and the traded OTC Sumyoblenergo (often referred to as SOEN). In 3Q09, only CHEN and CHON posted earnings (UAH 8 mln and 4 mln respectively). The remaining power distributers generated a net loss in 3Q09, with KION and VOEN being the worst performers in 3Q09 (with a UAH 25 mln and UAH 7 mln net loss, respectively). In 9M09, only KION posted a UAH 19 mln net loss, while all other oblenergos were profitable. As for net sales, only ZAON suffered a 9% decline in its 9M09 net sales. This was due to lower power consumption on the part of industrial users, which represent a major part of the Company’s clientele. With a net margin at 12% in 9M09, CHEN remains the most profitable oblenergo.

As of October 21, 2009, the Ukrros association [36U1 GR, U / R] had processed 389 metric tons of sugar beets and produced 51 thsd metric tons of sugar, which is equivalent to about 13.5% of Ukraine’s overall sugar production for this season. Since the season began, the Company has managed to store 574 thsd metric tons of beets, or 52% of its plan. At the time that the Company posted its report, the Company had harvested 9025 hectares, representing 54% of the total sown area. Ukrros plans to produce 144 thsd metric tons of sugar in the new season. Due to technological innovations, natural gas consumption at the Orzhitskyy Sugar Refinery in 2009 fell from 43 cbm in 2008 to 37 cbm per metric ton of beets. As well, 19.2 metric tons of sunflower was harvested with an average yield of 1.75 metric tons per ha. 23% of the area sown with corn had been harvested, the yields for which exceeded expectations, reaching up to 7.0 metric tons per ha on some farms. In related news, Ukrros has already planted 30 thsd ha with winter crops, which equals 94% of its planned level.

Astarta [AST PW] has finished the winter crop sowing campaign for the 2010 harvest on an area of 37.5 thsd ha, 8% more than in the previous year. The area sowed with winter wheat is 33 thsd ha, while 3 thsd ha was sown with winter barley. Remarkably, Astarta sowed more than 30% of total area with seeds produced by Astarta itself. The harvesting of industrial crops has almost entirely been completed, as follows: 11.7 thsd ha of sunflower with an average yield of 2.7 metric tons per ha; 14.8 thsd ha of soybeans with an average yield of 1.6 metric tons per ha; and 4.6 thsd ha, or 34% of the total planned area, sowed under corn with a yield of 7.3 metric tons per ha.

According to the Deputy Prime Minister’s press service, Ukraine has concluded a contract with Belarus for the export of 2 TWh of electricity in 2010. Earlier on, Ukraine used to export power to Belarus in late-2007 at prices that were below those witnessed on the Ukrainian wholesale power market. In the summer of 2009, the state power intermediary, Ukrinterenergo, resumed power supplies to Belarus.

The Agrarian Chamber of Ukraine (ACU) has suggested a shift from direct to indirect taxes in the agricultural sector for the purpose of full implementation of the land market. The rental rate is based on low land taxes and an underestimation of arable land. The President of the ACU also commented that the cost of 1 ha of land in Ukraine is estimated to be USD 2 thsd, on average, and the tax is USD 2 per year, i.e. 0.1% of the appraised value. The rental rate is about USD 60 per year, which corresponds to 3% of the value of one hectare.

According to an announcement made by Ukraine’s First Deputy Minister of Agriculture, Boris Supikhanov, lending to the agricultural sector in Ukraine in 2009 decreased 3.14 times in comparison with the previous period – from UAH 13.5 bln to UAH 4.3 bln. The number of companies borrowing declined almost nine-fold from 15 thsd to 1.7 thsd. The loan portfolio in Ukraine also doesn’t paint a rosy picture, with long- and medium-term loans accounting for an estimated 20 percent of all loans.

According to a note from the State Statistics Committee of Ukraine, industrial output was down 18.4% YoY in September. However, positive MoM dynamics of 1.9% was shown. Therefore, industrial output in January-September 2009 dropped by 28.4% YoY. The cross-sectoral data is pending. According to earlier released data, industrial output has fallen 23.3% YoY in August, and 29.6% YoY in January-August 2009. Industrial output has dipped 3.1% in 2008.

Ukraine occupies the first place, by a wide margin, among major exporters of sunflower oil in the new season. In the previous season, Ukraine’s share in world exports was about 40%, with Argentina at 28%, and Russia at 17%. According to the forecast issued by Oil World, global production of sunflower oil in the 2009/10 marketing year will amount to 12.1 mln metric tons. At the same time, according to the USDA, the volume of world trade in vegetable oil in the current season will amount to 4.2 mln metric tons, which is one million metric ton more than witnessed in the previous season.

According to a note from the State Statistics Committee the retail sales of have dropped 20.7% YoY in January-September 2009 to UAH 164.96 bln (USD 20.67 bln). Previously, it was reported that the retail sales have dropped 20.5% YoY in January-August 2009 and grown 17.9% in 2008.