World production of vegetable oils - the growth trend is strengthened
Theinternationalconference"Fat-and-Oil Industry",organizedbyAPK-Inform Agency, was held attheendofNovember2013. Traditionally, the event was carried out at the turn of two seasons, in the period when representatives of the industry can upend the season-2012/13 and outline the strategy for doing business in the new 2013/14 MY.
In the current year the conference was held in one of the best hotels in Kiev - Fairmont Grand Hotel, which served as an additional factor to raise the event status. The number of conference participants totaled 260 delegates from 21 countries.
The list of the conference participants included representatives of industry associations, oilseeds producers and processors, the leading domestic and international agricultural experts, key exporters and consumers of oilseeds and its by-products, representatives of the banking sector.
It should be noted that during the second consecutive year the group of companies Creative Group became the General sponsor of the conference. Creative Group is the leading Ukrainian integrated agro-industrial company and one of the largest producers and processors of agricultural products in Ukraine, as well as the leader in the production of margarines and of special purposes. The company Syngenta became the Exclusive sponsor of the conference, the company is the well-known leader on the global agrochemical market, it produces a wide range of plant protecting agents, and serves as the world leaders in seed business. The largest importer of tropical oils to Ukraine - Delta Wilmar CIS, became the sponsor of the event for the fifth time (!), which indicates the high efficiency and stable interest in the reporting conference. The company BUNGE Ukraine also provided sponsorship support to the event. The conference received rather significant sponsorship support from the leading producers and suppliers of equipment for the fat-and-oil industry – the companies Harburg-Freudenberger Maschinenbau GmbH (representative of Germany in Russia), Farmet (Czech Republic), HUM (Turkey).
Traditionally the event was supported by the Ministry of Agrarian Policy and Food of Ukraine, and the major industry associations of the Black Sea region – Ukroliyaprom, Fat and Oil Union of Russia, which shows their significant interest in work of the conference. FOSFA (The Federation of Oils, Seeds and Fats Associations), the leading international organization on the fat-and-oil market, became the key international partner, supporting the event. We would also like to acknowledge the support of the Ukrainian association of soybeans producers and processors and the company Meyeroil.
Organization of the mini-exhibition within frames of the conference event repeatedly caused rather great interest of the industry representatives. In the current year the exhibition was presented by mainly producers and suppliers of technical equipment for the fat-and-oil industry, Harburg-Freudenberger Maschinenbau GmbH (representative of Germany in Russia), CPM SKET GmbH (Ukraine), HUM (Turkey), Farmet (Czech Republic), Amkol (Turkey), and Syngenta.
The main day of the conference started with the presentation of Zsolt Vincze, Assistant Vice President of the Commercial Group of R.J. O'Brien. According to the expert, in the current season the world prices for major vegetable oils (sunflower, soybean and palm oils) reach the same level. Such situation is observed for the first times during whole years of the price monitoring in the reporting market segment. Therefore, when making preferences, the market participants give primacy to price benefits not any variety of oils, he said. While speaking about the prospects of development of the world market of vegetable oils in the current season, Zs.Vincze suggested that the condition of soybean areas, primarily in South America, will influence at the situation. In particular, he believes that in the current season the oilseed planted areas will increase. The same trend will be observed in Ukraine, where next year agrarians will increase the planted areas of sunflower seed and soybeans.
Stuart Logan, Chief executive of FOSFA International, reported about activities of the leading international organization on the fat-and-oil market. The speaker noted that the Federation of Oils, Seeds and Fats Associations (FOSFA) is professional international contract issuing and arbitral body concerned exclusively with the world trade in oilseeds, oils and fats. Furthermore, the expert told in details about all intricacies of transportation of vegetable oils, including the measures which should be taken for keeping of the qualitative indices of vegetable oils, making a special emphasis on transportation temperatures for each type of oil.
The report on the Egyptian market of vegetable oils was presented at the high level. In coming years Egypt will significantly increase the volume of public purchasing of vegetable oils. Ali Ramadan, Chairman and CEO of Egyptian Australian Co. for Trading Agency, declared such forecast. To date Egypt buys monthly nearly 80 thsd tonnes of vegetable oils, including nearly 40 thsd tonnes of sunflower seed. Thus, the country annually purchases nearly 1 mln tonnes of the commodities at the state tenders, said the expert. At the same time, until 2025 the country plans to almost double the volumes of public purchases of vegetable oils per year, to nearly 2 mln tonnes of the commodities. Also, according to the expert, the volumes of foreign purchases of vegetable oils by private Egyptian companies will also significantly increase. A.Ramadan sees the main reason for the trend development in rather significant growth of the population in Egypt, which is annually growing by nearly 2.6 mln people, which consequently increases the country's demand in vegetable oils. Production of oilseeds and vegetable oils on the domestic market of Egypt remains at the low level, and in the coming years it is unlikely to significantly increase, stated the expert.
Siegfried Meyer, owner of the company Meyeroil, informed on the European market of vegetable oils, the main trends and development prospects during his speech. The speaker noted that in 2013/14 MY in European countries the production of vegetable oils will increase in the terms of growing of its consumption, especially sunflower oil consumption. At the same time, the expert said that in the coming months there will be observed an increase of oilseeds stocks, as the production volume will exceed the consumption.
Wessel Lemmer, Senior Economist of the consulting company Grain SA, made a presentation about quite promising direction of shipments of sunflower oil of the Black sea origin (South Africa), and the potential for cooperation in the reporting sphere is quite high. He noted that the quality is the main advantage of sunflower oil from the Black Sea region. However, it is also worth noting that sunflower oil produced in the EU and Argentina makes serious competition to the Black Sea region, said the expert. As for the European sunflower oil, the absence of import duties is its main advantage, whereas the oil from the Black Sea region has the tariff of 10%, said W.Lemmer. And Argentinian sunflower oil has more convenient logistics terms.
As always, the presentation of Stepan Kapshuk, General Director of the industry association Ukroliyaprom, was interesting and informative. The specialist stressed that Ukraine will continue holding the position of one of the world leaders in terms of production and export volumes of sunflower oil. According to S.Kapshuk, the world production of vegetable oils showed a clear growing trend in the season-2013/14 to reach 168 mln tonnes. At the same time, Ukraine forms the significant share of the production of crude sunflower oil in the world, and continues occupying the position. He also forecasted that in the current MY Ukraine will produce the record volumes of sunflower oil - 4.3 mln tonnes, and the exports will total nearly 3.7-3.8 mln tonnes. While talking about the production volumes, S.Kapshuk noted that in 2013/14 MY the general production of the major oilseeds in Ukraine will exceed the level of 15 mln tonnes. The expert also added that according to Ukroliyaprom estimations, during recent 15 years the processing capacities of oilseed raw materials in Ukraine increased in 5.3 times - to 13.3 mln tonnes in 2013, against 2.5 mln tonnes in 1998. The loading capacity of the processing enterprises in the reporting period increased from 30% to 85%.
We would like significantly focus on the report of Yuri Davydov, Chairman of the Board of PJSC "Creative Group". During his speech at the international conference the specialist noted that to date the five leading Ukrainian companies-exporters of sunflower oil cover 30% of world exports of the commodity. He also noted that in the coming years the foreign supplies of Ukrainian sunflower oil will remain at rather high level. China and India will also become the traditional directions of the commodity exports (the countries of Europe and the Middle East). According to Y.Davydov, there is clearly observed the trend of increasing of Ukrainian sunflower oil supplies to China and India. If in 2011 China imported 40 thsd tonnes the commodity from Ukraine only, since the beginning of 2013 the index totaled 390 thsd tonnes. And in 2011 India imported 717 thsd tonnes of Ukrainian sunflower oil, but since the beginning of 2013 - 1.15 mln tonnes. Moreover, in the nearest future the fat-and-oil sector of Ukraine will continue developing the trend of concentration of oilseed processing capacities by large-scale companies. He noted that if in 2007 large-scale Ukrainian companies covered 50% of the processing capacities of oilseeds, then in 2012 the index reached 70%. In the future, the trend will continue, and the country will face new mergers and acquisitions in the industry, said the expert.
While speaking about the specifics of the Russian market of oilseeds and by-products, Yuri Morozov, Executive Director of the Fat-and-Oil Union of Russia, said that by 2017 Russia plans to increase production volumes of the major oilseeds to 21.8 mln tonnes, while the planted areas - to 14.5 mln ha. At the same time, he reminded that in the current season the planted areas under the main oilseeds in Russia totaled 9.5 mln ha, including sunflower seed areas - 7.2 mln ha. Furthermore, Y.Morozovforecasted the growth of production volumes of Russian vegetable oils to 6.9 mln tonnes by 2017. In particular according to preliminary estimations, the production of sunflower oil will increase to 4.7 mln tonnes, said the speaker. Y.Morozov also noted that in the current season Russia will continue increasing the import volumes of palm oil, which is expected to reach 650 thsd tonnes.
While reporting about consumer preferences in such countries as Ukraine, Russia and Kazakhstan, Marina Zabarilo, Head of ConsumerScan department of GFK Group GFK Ukraine, indicated that to date, there are almost all consumed fat-and-oil commodities in Ukraine are produced on the domestic market, while in Russia and Kazakhstan the index is somewhat lower. At the same time, there is no trend to purchase cheaper commodities among consumers of fat-and-oil commodities both in Ukraine, Russia and Kazakhstan. If the buyer is confident in the qualitative parameters, he is willing to pay more for it, said the expert. While speaking about the dynamics of price changes for fat-and-oil commodities in the reporting countries in the I-III quarters of 2013, M.Zabarilo noted that the prices rose by nearly 4.5% compared with the same period in 2012. Thus, during the first 9 months of 2013 Ukraine had stable consumption of fat-and-oil commodities as opposed to Russia and Kazakhstan, where the index decreased.
Matt Ammerman, Commodity risk manager of the company INTL FCStone Ltd., reported on the most optimum methods of price risk management for the companies operating on the fat-and-oil market, describing the optimum strategies for maximizing the profit margins and minimizing possible risks.
Summing up the results of the conference, we would like to once again thank all participants and all companies which supported the conference not for the first time, and those who joined us for the first time, on behalf of the entire team of APK-Inform Agency. We once again thank to all participants of the Twelfth international conference "Fat-and-Oil Industry - 2013", and we can confidently say that the success of the event was largely dependent on you. We hope that we managed to meet your expectations as the organizer, and the event continues to be one of the key conferences of the fat-and-oil industry not only in Ukraine!
Headof the organizing committee
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