Ukraine - forecast of soybean market development by 2015 *

 

Soybean is the most popular crop in the world. To date its share in the world oilseeds production totals nearly 60%. According to the forecast of the USDA, in 2011 soybean world production will total nearly 260 mln tonnes, up 1.5 times compared to 2000 ,and in 2015 the rate will exceed 290 mln tonnes. The total soybean sowing area is 96 mln ha in 75 countries.

According to the first statistics data, first sowings of soybean appeared in Ukraine in the late 1920^th, at the same tine the average yield during the long time did not exceed the level of 7-9 c/ha. After passing the certain period of formation and adaptation to the local conditions, since 90^th soybean growing in the country started to gain momentum, and during the last 10 years there is the clear tendency for soybean planting areas increase and its yield as well. In favor of the stated facts Ukraine takes the 8^th position in the rating of the world soybean producers, by exerting pressure in the traditional South-American countries, growing oilseed as Bolivia and Uruguay.

 

 Since 2003, the Ukrainian Association of producers and processors of soybean is responsible for the soybean market development in the country. Specialists if the Association, of the department of markets of plant growing of the Ministry of Agrarian Policy and Food of Ukraine, the scientists of the National Academy of the Agrarian Sciences, and also the specialists of the enterprises carry out the huge work by provision with the essential increase of the soybean production. Certainly the contribution to the success of the soybean production made the industrial programs "Soya Ukrainy 2004", "Soya Ukrainy 2005-2010", "Soya Ukrainy 2008-2015", which assisted the creation of the major research and production base of the industry.

To date in Ukraine there are 5860 enterprises growing soybean as opposed to 1400 in 2003, 162 producers of seed material of the crop, 109 registered verities of soybean.

Soybean market is one of the most dynamically developing markets in Ukraine. Thus in 1999 soybean crop total 45 thsd tonnes, in 2005 – over 600 thsd tonnes, in 2009 – the country harvested the first million of the soybean, and in 2011 – the country reached the production level exceeding 2 mln tonnes.

 

At the same time, taking into account the growing interest of agricultural producers for soybean growing, oilseed and its by-products demand increase on the domestic and foreign markets as well, our opinion is that the potential of Ukraine of soybean production is not spent yet. It is based on the estimations and forecasts of APK-Inform Agency, specially prepared for presentation during the business meeting “Expected volumes of production and processing of soybean in the nearest 5 years” which was held on October 28, 2011 in Kiev under the support of the Ministry of Agrarian Policy and Food of Ukraine.

Thus, according to our forecast, soybean planting area in Ukraine under the crop of 2015 may reach nearly 2 mln ha as opposed to 1.1 mln ha in 2011. Taking into account the average difference between planted and harvested areas soybean sowing area will total 1.82 mln ha.

While pricing in the base of the forecast the level of agricultural technologies growth, and if there is no any extremal weather conditions, we expect the soybean yield level increase by 2015 to 20 c/ha as opposed to the average rate for the last 3 seasons at the level of 17.8 c/ha. This will allow to harvest soybean at the level of 3.63 mln tonnes in bunker weight (3.52 in clean weight) as opposed to 2.2 mln ha in 2011.

We would like to note that taking into account the resource possibilities of Ukraine the specialists of the National Academy of the Agrarian Sciences of Ukraine scientifically based that in favor of the soil-climatic conditions in soybean belt of Ukraine the potential for oilseed growing is up to 4 mln ha and it is possible to harvest the volume of 8 mln tonnes while the average yield totals 20 c/ha.

As about the structure of soybean distribution, according to our estimations, the production potential will allow to increase the oilseed exports and its domestic processing. To date the share of the soybean exports in general distribution is higher than the share of the domestic consumption (56% in average as opposed to 44%). According to our forecasts , the stated tendency to be continued up to 2015/16 MY.

 

Thus, in 2015/16 MY Ukraine will enlarge own processing capacities for soybean which will be able to process nearly 1.1 mln tonnes of oil seeds. For comparison: in 2010/11 MY Ukrainian enterprises processed 370.4 thsd tonnes of soybean, the forecast for 2011/12 MY totals 550 thsd tonnes.

Taking into account unavoidable losses and the expenses for seeds in 2015/16 MY the export potential of the country will total 2 mln tonnes as opposed to 1.1 mln tonnes in 2011/12 MY. The most prospective soybean and its by-products sales markets for Ukraine is the countries of the European Union as the largest importers and consumers of the stated commodity. However there is still one sharp problem of the GM-soybean. According to non-official data nearly a half of the soybean produced in Ukraine is genetically modified commodity.

 

 In the case of the competence of the forecast for the soybean processing volumes in 2015/16 MY (1.1 mln tonnes) soybean meal and oil production in Ukraine will face a double increase compared to the rates of 2011/12 MY. Thus, soybean oil production will total 200 thsd tonnes, soybean meal – 800 thsd tonnes.

Saving tendency for hog and poultry heads increase in Ukraine and in the world forms the preconditions for increase of the soybean meal domestic consumption and its exports. However due to the fact that in the Ukrainian cattle-breeding industry they traditionally use sunflower meal, which is more attractive by its cost in favor of the larger supply volumes, the temps of soybean meal consumption growth will be much lower of its production growth temps which will allow to increase export of commodity compared to the current level. According to our forecast in 2015/16 MY soybean meal exports from Ukraine will exceed 300 thsd tonnes as opposed to 6 thsd tonnes in 2011/12 MY. Soybean oil exports will increase in 3 times in the stated period to 170 thsd tonnes.

Thus Ukrainian soybean market has the huge development prospects. Growing domestic and export demand for soybean and its by-products, and also the availability of the necessary resources will allow by 2015/16 MY ton increase oilseed production to 3.63 mln tonnes, and its processing – to 1.1 mln tonnes, and exports – to 2 mln tonnes. Besides the most important factors providing the increase of processing volumes will be capacities modernization by processing and storing, the Government support of the cattle-breeding development, elaboration and presentation of the formulation of combined-feed using soybean meal. In order to hold positions of Ukraine on the export market the key issues will be logistics development, quality of commodity, improving the culture of business and tax issues.

 

* According to the materials of presentation of Yulia Kostenko, analysts of APK-Inform Agency, during the meeting “Expected volumes of production and processing of soybean in the nearest 5 years under support of the Ministry of Agrarian Policy and Food of Ukraine” (October 28, 2011, Kiev).