26 July 2023

During the reporting period, Astarta increased its sugar sales, while finishing the sale of the 2022 harvest of grain and oilseed crops.

According to the operational report for the second quarter of 2023, the company's sugar sales amounted to 69,000 tons, which is 35% more than in the previous quarter and 9% more than in the second quarter of 2022.

The average selling price of sugar by Astarta was UAH 28,200 per ton, which is also higher than in the previous quarter (UAH 26,200).

In the current quarter, according to our estimates, Astarta sold about 45% of the total sugar stocks as of March 31, so even despite the ban on sugar exports from Ukraine starting June 5, we do not expect that in the new season (September-October) Astarta will enter with a significant inventory of the product.

On the other hand, the stoppage of exports may lead to a rather significant decrease in the average selling price of sugar in the third quarter of 2023 (currently, due to rather high world prices, the export price is higher compared to the domestic price of sugar in Ukraine).

As for grain sales, in the reporting quarter, Astarta completed the sale of corn and sunflowers for the 2022 harvest. A total of 59,000 tons of corn, 28,000 tons of sunflower and 6,000 tons of wheat were sold.

The average selling price of grain and oilseeds decreased compared to the price in the previous quarter - the average selling price of sunflower was only UAH 13.2 thousand per ton (in the first quarter of 2023 – UAH 15.9 thousand), corn – UAH 6.8 thousand per ton (against 9.9 thousand hryvnias per ton, the decrease in the average sale price of corn may be due to the change in the basis of sale).

The main negative factor for the Astarta Agriculture segment is the non-prolongation of agreement on the grain corridor out of Ukrainian ports, which may negatively affect the sale prices of corn, wheat and sunflower already in the new season.

At the same time, from the point of view of the sown area distribution between different crops in the 2023/24 season, Astarta halved the area under corn (from 38,000 ha to 19,000 ha), and the area under wheat also decreased (from 55,000 ha to 43,000 ha). ha), the area under sugar beet, soybean and rapeseed was increased.

The dynamics of cultivated areas means that Astarta continues to bet on processing, and plans to produce and export more goods with a higher added value (the share of logistics costs in the net cost of such commodities as sugar, soybean oil and meal is smaller vs. corn and wheat), while reducing dependence on grain export routes (for corn and wheat).

The dynamics of sales of soybean processing products - soybean oil and meal - remain good. In the reporting quarter, the company sold 12.2 thousand tons of soybean oil (10.1 thousand tons in the previous quarter) and immediately 58.9 thousand tons of soybean meal (41.3 thousand tons). The average selling price of oil decreased by 15% compared to the price in the first quarter of 2023, the average selling price of meal increased by 4%.

In general, according to our estimates, the profitability of soybean processing in the reporting quarter remained at a fairly good level (recall that, in general, the profitability of soybean processing in the current season is the highest in recent years, our recent review of the Ukrainian soybean market can be found at the link).

Sales of milk by Astarta in the reporting period almost did not change compared to the previous quarter (about 28,000 tons), the average selling price of milk also almost did not change compared to the first quarter of 2023.

The general data on sales volumes in Q2 2023 are presented in the table below:

Sales volume, tons	Q2 2023	Q1 2023	Q2 2022
Sugar	68 863	50 800	63 063
Wheat	5 904	40 846	3 018
Corn	58 788	227 237	32 562
Sunseeds	28 621	31 617	9 953
Soybean oil	12 252	10 158	8 131
Soybean meal	58 910	41 311	30 682
Milk	28 389	28 810	23 477