Season of Ukrainian soybeans-2013/14. Intermediate results
One of the features of the current season is the soybean meal/ cake and oil production owing the processing facilities increase in Ukraine in 2013. But in the stage the exports significantly exceed the domestic processing volumes and soybean is still the export-oriented crop. About the situation development on the Ukrainian market since the beginning of 2013/14 MY and the further prospects to be declared in the current material.
Note the beginning of 2013/14 MY for soybean market was rather complicated. Thus on the one hand the forecast of the soybean world production increase in the current season caused the prices fall on the Ukrainian soybean market before the new season start. So the agricultural producers had faced the unprofitable situation due to the soybean domestic demand prices decrease by 2000 UAH/tonne in a month. On the other hand the expectations of the processors of the further decrease of soybean prices under the pressure of the new crop entering the market did not pan out. The weather caused the corrections itself instead.
According to the estimation of APK-Inform Agency in 2013/14 MY Ukraine harvested the record crop of soybeans (2.61 mln tonnes). It was reached owing the yield increase despite the slight decrease of the planted areas and the unfavorable weather conditions. Thus in the current season the planted and harvested areas totaled 1.37 mln ha and 1.34 mln ha compared to 1.48 and 1.41 mln ha in the previous season and considering the current season average yield at the level of 2.03 (1.71) t/ha.
Soybean is the traditional export-oriented crop in Ukraine. Note owing the production volumes increase the analysts expect the exports increase to 1.38 mln tonnes. Thus last season main importers were Italy (33%), Egypt (18%), Turkey (10%), meanwhile in September-October 2013/14 MY the leader is Russia. The stated fact is based on the attractive price of the Ukrainian oilseed compared to the Russian one. Compare: as of to date the price ratio for soybean on the domestic market of Ukraine and the European part of the Russian Federation totals nearly 95 USD/tonne CPT.
Note the soybean exports in the stated period were not active. The current situation is based on the soybean harvesting campaign delay so the crop exports were lower in comparison with the September-October 2012/13 MY. Thus in the first two months of the current season Ukraine exported 118.7 thsd tonnes of soybean, mostly in October (over 107 thsd tonnes). At the same time in 2012/13 MY the stated rate exceeded 185 thsd tonnes , meanwhile the exports were more active in November.
Soybean imports to total 3.9 thsd tonnes – the level of the previous season. Note most imported volumes are used as seeds and in the period of the planting campaign – February-March.
Note owing the production increase the soybean consumption also rose. Thus the processing capacities have essentially increased in the recent years owing the new plants putting into operation and the current lines modernization. According to the estimation of APK-INform in 2013/14 MY the processing capacities to increase to 1.5 mln tonnes (1.3 mln tonnes in 2012/13 MY).
The domestic consumption of soybean to total 1.26 mln tonnes. Thus the soybean processing for soybean meal/ cake to total 950 thsd tonnes up 200 thsd tonnes of the same rate of 2012/13 MY.
Soybean market tendencies since the beginning of the season
The world production increase forecast in particular in the main producing countries (USA, Brazil, Argentina) cause the price fall on the Ukrainian export and domestic market of soybeans.
Note the soybean harvesting campaign started in the middle of August which is earlier than in the previous season. So by the middle of the stated month the market faced the first offer of soybeans. The prices continued to decrease. In September the works delayed due to the unfavorable weather conditions so the bearish trend stopped.
Thus despite the world production increase to the record (over 280 mln tonnes) the prices were essentially supported by unfavorable weather conditions till the middle of October. According to the operators in September – the first half of October on the domestic market of soybeans there was bullish trend. Quality was poor and was not in accordance with the GOST standards, there was poor protein content (26-30%) beside high moisture and impurity.
Note despite the optimal weather in October the harvesting campaign was still delayed due to the agrarians switching for sunflower and corn harvesting. So the offers number and the large-scale parties was limited.
The purchasing prices were at the level of 3650-4000 UAH/ tonne EXW depending on the region and quality.
In November with the harvesting campaign being in act the soybean purchasing prices were declared at the level of 3700-3950 UAH/ tonne EXW reaching 4150 UAH/ tonne EXW in the South of the country.
The prices rise was note in the end of November – beginning of December owing the few reasons. First – insufficient number of large-scale parties offer. Besides there is the grown interest for soybean purchasing by export-oriented companies. As of to date the prices are declared at the level of 3850-4150 UAH/tonne EXW. At the same time the low temps of soybean meal/ cake sales hold the prices rise.
Note despite the supply and demand prices rise their level was lover of equal to the last year level in the period of September-December.
Another feature of the current MY is the large-scale number of the soybean offers with poor qualitative parameters, especially the moisture level (nearly 27%) and poor protein content.
In the nearest time on the market of soybeans there will be the season slowing of the trading activity. The operators forecast the offers number rise of the oilseeds will be on the market if the agricultural producers need the financial floating assets. Considering the stated facts the prices decrease to be in February-March before the spring planting campaign begins. Besides the essential pressure to be provided by the soybean export market owing the Brazil and Argentina new crop entering the market.
The domestic prices support to be provided by the high competitiveness between the processors and the season active demand for soybean meal/ cake from the combine-feed enterprises.
At the same time while resuming the 2013/14 season for soybean market note considering the tight situation on the oilseed market of Ukraine, there are other problems needed the certain decision, and the first of them is the genetically modified soybean. There has recently been the information about the Ministry of the Agrarian Policy and Food to legalize its production and sale and initiated the particular growing of the technical crops – soybean from the modified seed material as it is in Russia and EU. If it is being positively decided the agricultural producers to get the choice – use the traditional or modified seeds providing more stable crop.
Second is the issue of the possible introduction of the soybean export duties. Thus rather beside the sharp issue for the sun seeds market on the export duties cancellation a lot of soybean market participants as processors and the various organizations members vote for the soybean import duties introduction. It is obvious to suppose that soybean Ukrainian processors would be in the better position owing the competitiveness lowering on the market. But how will the stated fact impact on the exports considering Ukraine is in TOP-10 of the main exporters of soybeans is still the open issue.
Head of the oilseed market department
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