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Ukrainian rapeseed market – new season and old problems


Despite the production annual decrease Ukrainian rapeseed has the highest export potential among the oilseeds. Traditionally, the certain volume of the crop is for export providing the high position on the European market.
This material states about the key moment of the past season of rapeseed (2011/12) and also about the major tendencies inherent the oilseeds market in the beginning of season-2012/13
Ukrainian rapeseed: export market saves the dominating position
First better to note the basic factor in the formation of the price situation on the rapeseed domestic market is the exports market, meaning the demand for rapeseed on the world market and its prices. Nevertheless despite rapeseed seeds are highly demanded in Europe, the Statistics data states in Ukraine since 2009 there have been rapeseed planted areas decrease. Meanwhile rapeseed planted areas decrease is fully compensated with their widening under the major oilseeds – sunflower and soybeans.
However in order to face the situation clearly since the beginning of 2012/13 it is necessary to remind the past season. Thus, in 2011/12 MY rapeseed planted areas totaled 1168.6 thsd ha, meanwhile the harvested area was at the level of 832.7 thsd ha. At the same time the oilseed general production totaled 1.4 mln tonnes owing the high yield level totaled 17.3 c/ha. Note the maximum yield level was in the Western parts of Ukraine and totaled 25.9 c/ha.
Rape seed pas season was unstable for the market participants in the price policy and the activity of the trade-purchasing work. The price situation on the domestic market depended on the world market tendencies due to the world market is the major sales market of the Ukrainian raw-materials. In 2011/12 MY Ukrainian rapeseed was supplied to 21 countries. Over 70% of the general exports was in the first have of season-2011/12 (July-December) in the period of more favorable market conjuncture. Meanwhile the major importer was Poland bought over of 370 thsd tonnes oil seeds.
The market participants stated 2011/12-season started with the high demand prices on FOB, DAP to be at the level of 630-650 USD/t. During September-January prices changed being depended on the world market situation and did not face the clear trend. However since the second half of January 2011 and to April 2012 FOB demand prices faced the stable increase being stopped shortly (February).
As for the domestic prices, the rapeseed cost in the beginning of season-2011/12 were announced at the level of 4850 UAH/t EXW. The stated price situation was inherent to the market all over July, But since August there have been the negative price tendency cause the export prices increase. Demand prices in September-October did not exceed 4400 UAH/t EXW.
Note despite the limited number of the raw-material supplies and also increase demand of the export-oriented companies for rapeseed, since March and till the end of the past season the demand prices were at the level of 4350-4400 UAH/t EXW. In the current situation the raw-material sellers used to prefer to hold sales awaiting for the favorable moment to resume them. The waiting attitude was caused by the fears for the rapeseed condition due to the anomaly heat in spring-summer period.
Start of the Ukrainian season of 2012/13: following the traditions
The rape seed general production of 2012/13 MY totaled 1.255 mln tonnes down compared to July forecasts. The major reason of the current situation is the harvested areas decrease due to poor condition of the plants caused by unfavorable weather conditions. Thus, in this season the harvested area totaled 607.7 thsd ha with the average yield of 21.2 c/ha.
Rapeseed harvesting campaign of 2012/13 started in the middle of June traditionally in the south oblast and in the Autonomous Republic of Crimea. The small parties of rapeseed started coming for sale by trucks norms. The quality was not high as it is usual for the beginning of harvesting, in particular the yield was at the level of 10-14 c/ha.
Meanwhile the harvesting campaign was moving the market participants noted the lack of the oilseed supplies. At the same time the high demand of the export-oriented companies for rape seed and as a circumstance the traders necessity to attract rather large-scale parties of seeds initiated the purchasing prices growth. Also note during the period of July-September there were fulfilled forward contracts concluded in spring-summer time when rapeseed prices were higher of the September-October rates. Thus average currency prices on FOB basis in the beginning of the season (July) were declared in wide range – 610-645 USD/t depending on the terms of fulfillment and concluding as well. Rather stable price situation with the bullish trend usual for the second half of August and the first half of September was on the rapeseed export market. In the stated period (August-first half of September) bid prices were at the range of 615-640 USD/t FOB. However in the end of September the bullish trend was replaced by prices decrease following the same changes on the rapeseed world market. Meanwhile bid prices were declared at the level of 635 USD/t FOB.
As for demand note in the first half of July bid prices were repeatedly corrected upward at the range of 4350-4500 UAH/t EXW, 4450-4650 UAH/t СРТ and to 4850 UAH/t СРТ. Meanwhile agricultural producers offered the limited volumes of rapeseed parties due to the conditions of the rising market and declared the prices at the level of 4700 UAH/t EXW, meanwhile bid prices were declared at the level of 5000 UAH/t EXW.
Note by the end of July all the regions started the harvesting campaign. Market operators declared the good quality of harvested seed. The average yield totaled 20-22 c/ha, in the certain oblasts was at the level of 25-30 c/ha, meanwhile the oil content was at the level of 44-45%.
Rapeseed world prices decrease and the oilseed demand slowing from the export-oriented companies caused the domestic prices decline in the end of July – beginning of August . Note since the stated period the oilseed demand prices used to be changed meanwhile the formation of the price range was influenced by the territorial closeness to the ports and the offered parties volumes.
Market participants declared supply prices in the northern and western oblasts at the level of 4350 UAH/t EXW, meanwhile bid prices were declared at the level of  4450-4550 UAH/t EXW.
Thus due to the bid/ supply prices imbalance during the first half of August there was slow activity of the trade-purchasing work. Despite the situation stabilizing in the second half of August the traders continued to declare minimal bid prices note the large number of supplies.
At the same time the certain traders purchased large-scale parties of the oilseed (to 1500 tonnes) meanwhile purchasing prices were declared at the level of  4400-4550 UAH/t EXW depending on the region, payment conditions and forms. The buyers noted the high quality of the purchasing parties.
September was characterized with the previous slow trade-purchasing activity. Most of the agrarians holding the large-scale raw-material parties and owning the storage capacities continued to take the waiting attitude waiting for further prices increase or preferred to hold sales. Bid prices in the central and southern oblast on CPT – basis were declared at the level of 4600-4680 UAH/t.
Forecasts of the Ukrainian rapeseed market development. What to expect from the next season?
Considering the practice of the previous few seasons and the high interest of the importers to the rapeseed it is possible to suggest in 2012/13 season export-oriented companies will be the major players on the market.
As for the further prospects of the rapeseed production in Ukraine it is impossible to forecast. Note the possible cancellation of donations of the European Union for biofuel production so the interest of the Eeurozone to the Ukrainian rapeseed will slowdown. At the same time it will cause the domestic processing prices increase of the oilseed. But it is possible only of there are the sales markets of the major rapeseed by-product – rapeseed meal/ cake and rapeseed oil. But it is possible to state: without availability of the favorable world market conjuncture of rapeseed and the by-product as well they should no expect the high interest of the Ukrainian agrarians to the rape seed production.

Ukraine: exports of peas broke the record during recent three seasons

According to the operative statistics, in July-August of 2012 Ukraine exported nearly 54 thsd tonnes of peas (including groats). At the same time, in the same period of 2011 the export volumes totaled over 34 thsd tonnes of the legume and by-products, in 2010 – nearly 42 thsd tonnes.
It is noteworthy that the trend is observed on the background of reduction of the forecast of the exports from the level of 142 thsd tonnes in 2011/12 MY to 130 thsd tonnes in the current season.
According to estimations of analysts, the ending stocks of peas in 2012/13 MY may total a little more than 40 thsd tonnes. According to the market experts, these volumes may become a reserve for increasing of the export volumes in 2012/13 season.
In 2013, the planted areas under the crop can increase by nearly 35%.

Ukraine claims its position as one of the leading agricultural countries in the world.

The country possesses 30 % of world’s black soil – the most favorable soil for agriculture. This allows for a certain commercial advantage. Ukraine has been gaining a stronger position on world’s agricultural market over the recent years.
In 2011, Ukraine harvested the highest grain crop in twenty years (since declaring independence). The unprecedented 55mn tones of grain – as well as the removal of the export taxes and quotas, contributed to export boost in 2011. This resulted in Ukraine becoming one of the world’s top three grain exporters. The country also ranks number one in barley exports globally. Moreover, this year Ukraine became the third corn supplier in the world, surpassing Brazil and being the second runner-up to the USA and Argentina.
In 2011, the agricultural production increased by 17.5% y/y, reported the State Statistics Service. The highest growth was seen in the north eastern Ukraine (Kharkov, Poltava, and Sumy regions). Interestingly, both agricultural firms and households experienced production growth of 23.8% and 12.3%, respectively.
In 2011 each region of Ukraine boosted agricultural production while in 2010 overall agricultural production in the country dropped by 1.5 %. In 2011, the agricultural profit rose by 52.3% y/y to UAH 19.8bn (USD 2.5bn), the State Statistics Service has reported. The profit margin edged up to 25.8% from 20.7% in the previous year. Some 79% of farmers ended the year in the black, while 21% saw losses.
In vegetal production, companies reported profit of UAH 17bn, with a profit margin of 31.8%. The production of milk and eggs remained also profitable. The profit margins doubled from 18.6% to 37% for the eggs producers while dairies’ margins inched up from 17.9% to 18.4%. On the opposite, the poultry farms deepened in losses area with the negative margin rising from 4.4% in 2010 to 13.4% in 2011. In 2011, profit margins of meat cattle farms decreased to minus 25.1% against minus 35.9% in 2010, of meat swine farms to minus 3.9% against minus 7.8%, wool production to minus 71.7% against 82.2%. At the same time, it became even more unprofitable to grow sheep and goats for meat (minus 41.1% against minus 29.5%).

Ukrainian honey actively conquering foreign markets

Export volume of Ukrainian honey in 2011, has doubled. In 2011, the total yield of honey amounted to 67.5 thousand tons.
The decline in world production, allowed Ukrainian exporters doubling its exports honey. In 2011 was sold around 4.4 thousand tons of honey on foreign markets, being 1.9 times higher than the corresponding figure last year. With the rates in 2011, exporters have received about $ 35 million by export.
Ukrainian honeys price that is exported is $ 2700-3000 / t, up $ 200 from last year and approaching the level of world prices. Strong demand in external markets for Ukrainian honey provides its relatively low price and high quality. Qualitative benefits of Ukrainian honey clear to Germany that the new season has imported 5 times more than last year. This also understood Russia, which finally opened its market to Ukrainian exporters. On global platforms Ukraine supplies, mainly honey from grasses and seeds, because these varieties are the cheapest. By the way, in 2011 slightly increased the production of buckwheat honey, which is associated with an increase in acreage of buckwheat by 40%.
According to official data, along with increased exports and domestic consumption of honey. Sales of honey increased by 3% while that price has risen by 25%.
However, the rising price of honey and honey products in natural markets is not so fast, this is due to the fact that prices are formed apiaries home owners who are interested to implement major products in bulk, which is beneficial for exporters and manufacturers of packaged honey.
Potentially Ukrainian beekeeping industry can produce twice as much honey, about 150 tons annually.

As of September 7, Ukraine produced 26.29 mln tonnes of grains

As of September 7, 2012, agrarians of Ukraine harvested grains and leguminous plants throughout the areas of 10.18 mln ha, or 68% of the forecast. The produced volumes totaled 26.29 mln tonnes of grains with the average yield of 25.8 c/ha, declared the Ministry of Agrarian Policy and Food of Ukraine.
On the same date of 2011 agrarians managed to harvest 35.15 mln tonnes of grains throughout 11.56 mln ha, with the average yield of 30.4 c/ha.
In particular, as of the reporting date of 2012 agrarians already harvested 129.7 thsd tonnes of buckwheat throughout the areas of 130 thsd ha (46%). The average yield totaled 10.0 c/ha.
Besides, as of the reporting date agrarians harvested maize for grain throughout the areas of 187.2 thsd ha. The production volumes totaled 636 thsd tonnes, the yield – 34 c/ha.
Agrarians harvested 124.9 thsd tonnes of millet throughout the areas of 110.3 thsd ha (54%), with the average yield of 11.3 c/ha.
As of the reporting date, Ukraine harvested 1.29 mln tonnes of sunflower seed throughout 968.0 thsd ha (20%) with the yield of 13.4 c/ha.
Ukraine also harvested soybeans throughout 170.9 thsd ha, and produced 253.1 thsd tonnes of the oilseed, the yield totaled 14.8 c/ha.
Besides, Ukraine realizes field works to prepare the soil for planting of winter crops. As of the reporting date, agrarians processed the areas of 8.72 mln ha (96% of the plan).
Agrarians planted winter rapeseed for the harvest-2013 throughout the areas of 809.8 thsd ha (86% of the forecast), other winter crops – 271.4 thsd ha (3%).

Exporting seed from Ukraine greatly expanded


     A significant expansion of export geography seed from Ukraine was made ​​possible by several factors, namely the accession of Ukraine to the two certification schemes profiled the Organization for Economic Cooperation and Development (OECD), the accreditation of laboratories Ukrderzhnasininspektsii in an international organization, by definition, sowing qualities of seeds – ISTA. This gave the opportunity to give Ukrainian producers to obtain international certificates and export seeds from Ukraine in 70 countries .

        It should be noted that since the beginning of 2012 has already exported more than 4.5 tons of seed to the EU . Derzhsilgospinspektsiey Ukraine developed proposals to the Law of Ukraine “On the seeds for planting,” which will help to harmonize the legislative field of seed requirements of the European Community.

      Recall for the 2011 export of goods from Ukraine to the EU amounted to $ 17,969,900,000, an increase compared with 2010 by 37.7%, imports – $ 25,750,600,000, respectively, and 34.8%.The negative balance was $ 7.7807 billion (minus $ 6,049,300,000 in 2010). Export import coverage ratio was 0.70 (for 2010 – 0.68).
        In the total exports of goods from Ukraine the share of EU countries amounted to 26.3% , imports – 31.2% (in 2010, respectively 25.4% and 31.4%). The main partners in both exports and imports of goods are Germany (respectively, $ 1,765,100,000 and $ 6,865,700,000), Poland ($ 2,794,100,000 and $ 3,183,300,000), Italy ($ 3,039,500,000 and $ 2,005,700,000 ) and Hungary ($ 1,340,700,000 and $ 1,326,100,000).