Opinion

March 1, 10:56 Source: APK-Inform Views: 3806

Ukrainian feed barley market - results of the first half year

 

 

It is already March 2014, which means it is time to sum up the first half of 2013/14 MY. In the reporting period the market of feed barley in Ukraine showed relative stability of prices and trading-purchasing activity. At the same time, the number of barley offers often varied at the minimum level. The present article will specify what problems the market operators faced in the current season, and what price trends were typical for the reporting market segment.

Beginning of the season: bearish prices

In the beginning of the current MY the market of feed barley in Ukraine showed the bearish trend. However, the reporting trend is always typical for the start of every season, and it is usually caused by significant increase of the number of grain offers. Taking into account that in most regions of the country during the periods of ripening and harvesting, the weather was quite favorable, agricultural producers were able to timely start the harvesting campaign, with intensified sales. According to data of APK-Inform market monitoring, the average supply / demand prices in early July 2013 decreased by 300 UAH/t and varied within the range of 1650-1760 UAH/t EXW and 1600-1740 UAH/t CPT, respectively. At the same time, grain producers supplied small-scale grain batches on the market. Agricultural producers often slowed down sales of large-scale barley batches, expecting for the further price development.

 

Barley production in Ukraine

 

2012/13 MY

2013/14 MY

Planted areas, `000 ha

3425,3

3377,9

Harvested areas, `000 ha

3293

3232,8

Yield, c/ha

21,1

23,4

Production, `000 tonnes

6936,4

7560,9

 

The bearish trend was observed on the market until September 2013. The supply / demand prices varied within 1410-1700 UAH/t EXW, and 1400-1680 UAH/t CPT, respectively. We should note that in the reporting period trading and purchasing activity rates increased. The number of barley offers significantly increased. Agricultural producers preferred selling the feed grain, and in most cases were ready to give some discount. Feed mills and livestock breeding complexes continued reducing own purchasing prices, and preferred buying large-scale grain batches.

Despite the active start of the season, in September 2013 there was marked some slowdown of trading and purchasing activity. Several factors influenced the reporting situation. First of all, the majority of customers already formed own stock volumes of barley for the long-term prospect in the beginning of the season. Secondly, agricultural producers less actively offered the grain on the market at bid prices, expecting for the further growth of purchasing prices. Also, in September many agrarians started harvesting maize and sunflower seed, while the harvesting campaign was hampered by adverse weather conditions.

 

 

Turning point: rising prices

At the same time, in November 2013 the market situation dramatically changed, the grain prices began gradually rising. Such change of price trends was primarily caused by rising of the demand for barley in the terms of rather limited number of offers. We should note that grain processing enterprises which required replenishment of their resource bases, reported on readiness to purchase the grain at 1800-1850 UAH/t CPT. Only several enterprises managed to purchase small-scale batches of feed barley at the previously announced bid prices - 1550-1750 UAH/t CPT. Agricultural producers actively offered maize and sunflower seed on the market, often constraining sales of large-scale batches of feed barley. Thus, the selling prices for barley varied within 1750-1880 UAH/t EXW.

At the same time, in December 2013 the situation in the market segment relatively stabilized. Despite the fact that the number of grain offers was insufficient, there was not observed any significant changes of feed barley prices.

But in January 2014 the market again faced the price increase, due to the fact that demand exceeded supply. Many buyers reported that they had the need to urgently purchase of large-scale batches of the grain, and were ready to raise their purchasing prices. Grain holders noted the increased demand for barley and raised their selling prices. According to APK-Inform data, in January 2014 supply / demand prices for barley varied within 1850-2000 UAH/t EXW and 1700-1880 UAH/t CPT. According to the market operators, the prices remained the same in the first week of February, but the number of grain offers remained insufficient.

Further prospects…

It is worth noting that despite the insufficient number of barley offers in the reporting period, and the growth of prices, the activity of trading and purchasing operations remained relatively stable.

In the second half of 2013/14 MY the market operators expect for increasing of the number of grain offers, while there will be not any significant reduction of prices.

 

AlexandrinaOvdienko,

Head of the grain marketsdepartmentof APK-Inform Agency

 

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