December 12 2011, 00:11 Source: APK-Inform Views: 288

Ukrainian market of soybeans - hope for positive

 

Analyzing the current situation which is on the Ukrainian soybean market, it is necessary to note that the interest for the oilseed faces the annual increase. Expecting the end of the harvesting campaign we would like to make the short analysis of the current situation in the stated segment of the Ukrainian oilseed market.

Harvest

During the last few seasons Ukraine faces the dynamic growth of the soybean sowing areas and its production volumes increase. If you compare the oilseeds sowing areas in the period of the last three seasons, in 2011 Ukraine sowed the record areas – 1.13 mln ha. Owing to the increase of the sowing and harvesting areas and also the introduction of the modern technologies of soybean its yield also improves. During the last few season the current rate faced the following changes 16.8 c/ha – in 2009, 16.2 c/ha – in 2010. In the current season according to the forecast of APK-Inform Agency, the average soybean yield will total 20.1 c/ha, meanwhile general production of oilseed will reach the record – 2.18 mln tonnes. The stated rate is up 2 times compared to the crop-2009 when Ukraine for the first time has overcome the million mark of the soybean general production.

Nevertheless, it is necessary to note that far not always the high level of agricultural production is the determinative factor in the willing to reach high rates. The weather conditions always impacted and will have the influence on the yield and qualitative rates of soybeans.

 

Supply and demand balances of soybeans in Ukraine

Soybean, tonnes, hа,c/hа	07/08	08/09	09/10	10/11	11/12
Beginning stocks	25 454	36 545	23 176	28 654	26 167
Sowing areas	670 740	558 460	644 380	1 076 000	1 123 900
Harvesting areas	583 080	537 940	622 500	1 036 650	1 059 431
Yield	12,4	15,1	16,8	16,2	20,4
Production	722 630	812 780	1 043 500	1 680 200	2 160 177
Imports	520	626	794	2 189	500
Total supply	726 925	825 568	1 036 165	1 660 636	2 122 038
Consumption:	500 000	525 000	745 000	645 000	1 000 000
processing at oil, including	277 320	378 178	475 709	370 439	550 000
industrial enterprises	253 279	354 757	449 175	342 750	516 917
other enterprises	24 041	23 421	26 534	27 689	33 083
seeds	67 000	70 900	118 400	123 600	165 000
other	148 410	67 662	140 531	134 351	263 780
losses	7 270	8 260	10 360	16 610	21 220
Exports	190 381	277 392	262 511	989 470	1 100 000
General distribution	690 381	802 392	1 007 511	1 634 470	2 100 000
Ending stocks	36 545	23 176	28 654	26 167	22 038

 Processing

According to the estimation of APK-Inform Agency, in 2011 Ukrainian enterprises will process nearly 550 thsd tonnes of the oilseed, up 1.5 times of the last season rates. However the temps of Ukrainian soybean production essentially exceed the soybean processing volumes. Soybean meal is the price setter on the world market of the meals, which is explained by its leading position by production volumes and by nutrition features as well. At the same time the Ukrainian oilseed demand is not high on the domestic and foreign markets as well. What is the reason?

The main consumers of soybean meal as feed component are cattle-breeding complexes. At this stage most of the produced meal is consumed in the stated sector, but taking into account the low demand of the Ukrainian population on the animal products (due to low pay), soybean meal consumption increase on the domestic market is unlikely in the near term prospect.

Taking into account the high level of the stated product demand on the export market, it is reasonable to suggest that Ukraine has rather high potential in order to fulfill the stated niche by the commodity of the domestic production. However, there is one “but”, if the most of the Ukrainian soybean meal (cake) is not in accordance with the buyers demand. First of all, due to the unwillingness of the certain countries-buyers to purchase soybean meal produced with usage of GM raw materials. And the chance in the nearest term Ukrainian agricultural producers will abandon from GM soybean growing is very little.

Nevertheless, despite all the "but", Ukrainian exports of soybean meal (cake) grow. Thus, in the season-2009/10 soybean meal exports increased by almost 77% - to 1.68 thsd tonnes compared to 2007/08 MY. According to the forecasts of analysts of APK-Inform Agency, in the current season Ukrainian companies will be able to deliver on the foreign markets nearly 4.56 thsd tonnes of the product.

By increasing the production of Ukrainian soybean meal (cake) and its quality characteristics improvement soybean meal imports will decline. For example, last season Ukraine imported 39.7 thsd tonnes of soybean meal, which is down 41% compared to season-2009/10 (67.991 thsd tonnes). Imported commodities supply decrease will continue in the current season, and according to our forecasts, by the end 2011/12 MY this rate will state 10.58 thsd tonnes.

 

Supply and demand balances of soybean by-products in Ukraine, tonnes

Soybean by-products	07/08	08/09	09/10	10/11	11/12
Beginning stocks	16 495	21 971	30 352	47 802	27 475
Production	198 933	272 304	341 135	264 581	396 128
industrial enterprises and minishops	198 933	272 304	341 135	264 581	396 128
overestimation of State Statistics Service	19 233	18 737	21 227	22 151	26 467
Imports (meal)	141 925	87 835	67 991	39 650	10 580
Total supply	357 353	382 110	439 477	352 034	434 182
Consumption:	335 000	350 000	390 000	320 000	400 000
feed	230 000	255 000	300 000	230 000	300 000
other	101 400	91 200	85 600	86 500	95 700
losses	3 600	3 800	4 400	3 500	4 300
Exports (meal and cake)	382	1 758	1 675	4 559	6 000
General distribution	335 382	351 758	391 675	324 559	406 000
Ending stocks	21 971	30 352	47 802	27 475	28 182

Price situation

The past experience states, despite the high level of soybean exports, the oilseed world prices level indirectly impacts on pricing policy on the domestic soybean market. At the same time, it should be noted that mainly the price situation in the segment of the Ukrainian oilseed market depends on the sunflower seeds market. The confirmation of this yet again is the situation evolving on the market in the beginning of the season, when high soybean yield forecasts reflected the price situation and the season started with low prices.

To date Ukraine harvested oilseed throughout 86% of the planned areas and produced 1.953 mln tonnes of soybeans. At the same time, most of the agrarians prefer to hold soybean selling, hoping for further prices increase.

Exports

In the current season we expect the high level of soybean exports mainly die to the high level of soybean production. On the current state any limitations of soybean exports in Ukraine are absence and may be imported on the domestic market of Ukraine. According to the estimation of the analysts of APK-Inform Agency, in the season-2011/12 Ukraine will export nearly 1.1 mln tonnes of soybean of Ukrainian origin, up 110 thsd tonnes compared to the same level of 2010/11 MY.

Resuming all above stated, we can assume that season-2011/12 will be positive for all the members of the Ukrainian market of soybeans. And it is determined by the fact the Ukrainian government recent intention to limit exports of soybeans by imposition of the export duty at the level of 12% (but not less than 33 EUR/t) and did not become a reality. At least until they started...

 

Elena Ovcharenko,

expert of the Ukrainian market of oilseeds