For the first three quarters of the season-2017/18, Ukraine produced nearly 1.482 mln tonnes of wheat flour. At the same time, in March 2018 the production volumes slightly reduced compared with the same month figures of several previous years, and totaled 166.4 thsd tonnes.
In particular, Vinnytsia bread factory #2 remained the permanent leader, and produced 14.74 thsd tonnes of flour. Also, CJSC Vasylkiv Khlebproduct and Dunayivtsi Bakery Products Plant came to the TOP-10 of the largest millers for the first time.
Ukraine continued the trend of stable declining of the production volumes, but the export shipments demonstrated the same stable growing rates.
During the first 9 months of 2017/18 MY, the export volumes of flour from Ukraine increased to 354.73 thsd tonnes, against 295.8 thsd tonnes in July-March last season, and 255.7 thsd tonnes in the same period of 2015/16 MY. March became the most "fruitful" month in the first quarter of 2018, and in the reporting month Ukraine shipped 41.3 thsd tonnes of flour on foreign markets.
As for the price of the product, in the current season there is observed a marked rise in prices compared with the same period last MY. For comparison, the diagram used the prices of large-scale companies-exporters for top-grade flour in bags in FCA terms.
Also, the current positive changes in the geography of Ukrainian exports, which appeared last year, also continued developing in the current one. So, the African destination firmly kept more than a quarter of all flour shipments. Taking into account the Middle East destination, which in fact the same continent, the figures even exceeded 46%.
The exports segmentation by countries demonstrated that the shipments to North Korea slightly decreased, especially in March 2018, when the country received nearly 13.24 thsd tonnes of flour from Ukraine. At the same time, in the same month Ukraine exported much more product volumes to Southeast Asia, mainly to Singapore. Also, Ukrainian millers continued actively shipping flour to the United Arab Emirates, Angola, Chad, Benin, etc.
In 2017/18 MY, the list of major companies-exporters of flour from Ukraine almost did not change. Thus, in July-March period 10 companies shipped 84.6% of the general exported volumes (299.9 thsd tonnes). In the reporting period, 118 Ukrainian companies worked with flour shipment on foreign markets.
In the current season, TH Novaagro became the leader in flour shipment volumes. In addition to Novopokrovka Factory of Bakery Products, which always shipped the major volumes of the product, the company also supplied the product from Vasylkiv city. Vinnytsia bread factory #2 took the second position of the list, which was not a surprise.
It should be noted that to date Ukrainian flour milling company processed and shipped flour not only from Talne, but also from Dunaivtsi city. In March 2018, the company exported record volumes of the product at 13.2 thsd tonnes. Also, the company opened its sales representation office in Benin, which independently organizes flour selling operations. However, the shipment to Benin in terms of dumping and deferments of payment for the product towards North Korea played a low-down trick with Ukrainian flour milling company. Serious problems led to the fact that in April 2018 the company exported less than 2.7 thsd tonnes of flour. Kombinat Khliboproduktiv Talne mainly stood idle than worked, and did not ship pre-paid products, mainly wheat bran.
In April 2018, the export volumes of Ukrainian flour were rather uneasy — they did not even reach 25 thsd tonnes. TH Novaagro demonstrated good results, and shipped nearly 6 thsd tonnes of the product on foreign markets. In addition, two Kharkiv companies demonstrated good results — Enlil LTD and Roma Commercial Manufacturing Company LLC. It is a good indicator of stability and reasonable business dealing. But Vinnytsia bread factory #2 and Chmielnicki Mlyn significantly reduced the shipment volumes in April 2018.
We should note that the Russian Federation started actively exporting flour to North Korea, which also played its role in the reduction of supplies from Ukraine. The general decline of the economy in the country made the Russians to pay more attention to the lowly profitable flour business and significantly increase flour exports.
Generally, April became a real disaster in flour export volumes. In terms of absence of mainstream increasing of the supplies to the African and South Asian destinations, including bulk shipments, Ukraine will lose nearly 40% of the general export volumes.
As for the positive events of April 2018 — a new mill in Oleksandriia entered the foreign market under the trademark Zernari. In February 2018, the mill commissioned its equipment, and in April 2018 the exported volumes reached 288 tonnes.
Sergei Sakirkin,
Director of Production operations department at Agrarian Fund PJSC
