Special advisers to the leaders of France, Germany, Ukraine and Russia – the so called Normandy format – met yesterday to discuss the recent military escalation in Donbas. In related news, the US Pentagon repeated its earlier assertion that the Russian troop buildup around Ukraine currently being observed was the largest since the war in Donbas started in mid-2014. The EU’s top diplomat put the number of massed Russian troops at 150,000, which his office later corrected to more than 100,000, but said no new sactions against Russia were being planned at this stage.

Ukrainian agricultural output fell 2.3% y-o-y in March on weaker livestock production. Plant growing will be added to industry statistics with the start of the harvesting season in June.

The Economy Ministry signed a memorandum of understanding with a domestic association of sunflower oil producers to set indicative sunflower oil export volumes for the 2020/21 marketing year (MY; September 2020 - August 2021), capping total exports at 5.38 Mt.

Although stocks were up globally (see below), Ukrainian shares were under pressure for another week due to Russian military activity near the Ukrainian border.

LSE-listed MHP reported corrected 1Q21 operating results, revising the average poultry selling price to $1.43/kg (+4% y-o-y and 5% above initially reported $1.36/kg) due to changing the average export price to $1.38/kg (down 5% y-o-y but 10% higher than initially reported $1.26/kg). According to the company, the originally published export price was based on FCA delivery terms, rather than CIF as was normally the case before, and it was thus revised accordingly.

President Volodymyr Zelensky visited Paris on Friday to discuss the recent military escalation in Ukraine’s eastern Donbas region and Russian troop build-up around Ukraine with his French counterpart Emmanuel Macron and German Chancellor Angela Merkel, who joined the meeting via a video link.

WSE-listed Astarta Holding, Ukraine’s largest sugar producer, reported 1Q21 sugar sales of 58 kt, down 25% y-o-y, at an average price of $577/t, up 49% y-o-y and 23% q-o-q. Grain and oilseed crop sales totaled 80 kt (-67% y-o-y), including 73 kt of corn (-69% y-o-y) at $200/t, up 12% y‑o-y and 16% q‑o‑q. The company also reported soybean oil and meal sales of 13 kt and 40 kt, +13% and -15% y-o-y, respectively. The average selling price of soybean oil jumped 51% y-o-y to $1,055/t and that of meal rose 54% y-o-y to $544/t. In the dairy segment, 1Q21 raw milk sales stood at 24 kt, up 2% y-o-y, averaging $421/t in price, up 3% y-o-y.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, amended its 2018 pre-export credit facility with a syndicate of European banks. The facility will fund Kernel’s working capital needs related to grain export operations, with the available limit under the amended facility totaling up to $200m. The existing tranche tenors were extended for one year: $34m to Jun. 30, 2023, and $166m to Jun. 30, 2022. The margin for the committed portion of the facility was reduced.

Ukrnafta scheduled an AGM for May 12, proposing to review 2019-2020 reports by the Supervisory and Management Boards, review and approve 2019-2020 financial results, distribute 2018-2020 earnings and decide on dividends. The proposals put on the AGM agenda imply no dividends for 2019 and 2020, but one of two draft resolutions concerning 2018 proposes paying out a dividend of UAH 1.9bn or UAH 35.6/share, equivalent to 30% of 2018 net income (the other resolution implies no dividends).

Tensions with Russia and its potential further military moves on the ground will remain in focus this week amid new efforts to reinstate constructive peace talks.

Parliament passed yesterday, at first of two required readings, a bill that would strengthen criminal liability for public officials for providing false data in their electronic asset declarations, after prior legislation to the effect was invalidated by the Constitutional Court last October and parliament passed a watered-down replacement bill in December.

The Ukrainian Foreign Ministry announced yesterday that Russia closed access to a section of the Black Sea adjacent to the Kerch Strait for “foreign military and public vessels” under the pretext of holding military drills in the area. The closure will reportedly last from Apr. 24 to the end of October.

LSE-listed iron ore pellet producer Ferrexpo scheduled an AGM for May 27, announcing a proposed final dividend of 13.2 US cents per share (vs. 3.3 US cents in 2019), to be paid on Jul. 1, 2021, to shareholders on the register at the close of business on Jun. 18, 2021.

The NBU hiked its discount rate by 100bp to 7.5% p.a., more sharply than a 50bp increase suggested by its base-case forecast released in January. The Bank revised its forecast of the key rate accordingly, expecting it to stay at 7.5% through end-1Q22, decline by 50bp to 7.0% in 2Q22, and slip to 6.5% in 2023. The NBU said it was ready to continue with hikes if fundamental inflationary pressures appeared stronger than expected and inflation expectations worsened.