WASHINGTON, D.C., U.S. — Ukrainian farmers are expected to plant less soybeans in the 2019-20 market year due to changes in national tax legislation that make them less profitable, according to the Oilseeds and Products Annual released by the Foreign Agricultural Service of the U.S. Department of Agriculture.

The planted area is estimated at 1.6 million hectares, a decline of 11% compared to the previous market year. As a result, soybean production is forecast at 3.5 million tonnes, a drop of 22% when compared to the 4.5 million tonnes produced in 2018-19.

Soybean crush in 2018-19 was 1.6-fold higher than 2017-18 because the tax change made sales to domestic processors more profitable than sales to exporters. Crush in 2019-20 is expected to stay flat at 1.6 million tonnes, the USDA said.

Traditionally, more than half of all soybeans produced in Ukraine are exported. For 2019-20, exports are expected to drop 37% to 1.7 million tonnes.

“It should be noted that prices for soybean meal was the main factor influencing the ratio between soybean exports and those destined for processing in Ukraine,” the USDA said. “Soybean meal accounts for over 80% of output from soybean processing. Decreased global prices for meal usually results in an increase in exports of unprocessed soybeans, and vice versa.”

Exports of soybean oil have been increasing. In the 2017-18 marketing year, Ukraine exported 191,000 tonnes of oil, an 8% increase from the previous market year.

In September-December 2018, Ukraine exported over 67,000 tonnes of soybean oil, a 52% increase compared to the same period of the previous year, the USDA said.

More than 50% of the total volume was exported to the E.U. (mainly thorough Poland) and over 17% to India.

“Ukraine is expected to continue exporting increased volumes of soybean oil to various destinations in the coming seasons,” the USDA said. “The increase in soybean oil exports is driven by the growing soybean crush capacity and the increased competitiveness of crush versus soybean exports due to Ukraine’s tax changes.”

Under this assumption, soybean oil exports are forecast to reach 295,000 tonnes for both 2018-19 and 2019-20.