Ukrainian market of soybeans - hope for positive

Source

APK-Inform

4912

 

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

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