Ukraine&Russia – consumers form wheat bran prices
The markets wheat bran in Ukraine and Russia are often associated with the situation, emerging on the market of grains. Flour millers often view wheat bran as the possibility of obtaining additional revenue from the production of flour. In this case it is natural that market operators are trying to make selling of the product at the most affordable prices. At the same time, 2011/12 MY can not be called as the season of active growth of the market prices for wheat bran in Ukraine and Russia. The present article concentrates on the trends, which are characteristic for the market in these countries.
The first half of 2011/12 MY for the Ukrainian market of wheat bran was relatively difficult. During the period, market participants reported about the systematic decrease of selling prices for the finished products. Besides, the effect of the grain market is unlikely to be called as the main reason for the trend.
It is worth noting that the market of wheat bran was struck by the same "disease" as the flour market. The idea is that during the first half of the season, despite keeping of relatively high prices for milling grains, the price of wheat flour and wheat bran decreased. At the same time, taking into account the sufficiently large harvest volumes of wheat, the situation on the market of feed wheat did not make any significant impact at the wheat bran market. Market players pointed out that during the reporting period agrarians did not sell the grain at dumping prices.
However, in the first place market operators called active demand as the main reason for the decline of prices for wheat bran. It should be noted that since the beginning of the marketing year grain processors reported that due to the presence of sufficiently large number of wheat bran offers on the market, the buyers often insist on lowering of prices for the products. It should be noted that during the first half of the season the price of wheat bran was also dependent on sales volumes. Often market operators noted that that realized selling of small trading lots at the maximum prices. It should be noted that the highest level of wholesale prices of wheat bran was observed in the western region.
Grain processors, both working on the domestic market and cooperating with export-oriented companies, also faced the similar situation. It should be noted that the same trends on the market of wheat bran kept even after the production volumes of flour decreased in November 2011. Market participants noted that after the New Year began, the market even faced a certain increase in the rates of decline in prices for finished goods.
It is worth noting that during the reporting period, the price trends on the export market of wheat bran largely correlated with trends on the domestic market. However, the companies that realized shipments or already sold own products to traders, did not refuse to work in the direction, considering the work with foreign customers as the best. In the present season market operators did not face any limitations on exports by state authorities (both official and unofficial). Only in December last year, a number of market operators informed about the difficulties in obtaining of rail cars for exporting of the products outside the country. However, the problem was related not only to the state regulation, but also to certain changes in the work of "Ukrainian Railways."
While speaking about the further developments in the market segment, market operators incline to believe that in the near future the market will avoid the substantial reduction in prices. Market participants are informed that the situation in the field of flour production is quite complicated. To date, many producers define a future strategy as the work in rather slow rate of demand and high competition. Naturally, the question, first of all concerns of the market of wheat flour, but will also have high significance at the decisions on the market of wheat bran.
Wheat bran is one of the products of grain processing and, naturally, that the development of the market segment depends on the situation prevailing on the grain market. Taking into account that the price situation on the grain market in recent seasons is rather unstable, it is safe to say that the market of wheat bran clearly responds to all changes, and every season has its individual characteristics. The current marketing year was not the exception.
2011/12 MY started in rather predictably manner for the market of wheat bran. Coming of new crops grains to the market led to the decrease in demand for wheat bran. Due to the increasing number of offers for feed grain on the market at affordable prices, buyers reduced the purchasing volumes of wheat bran. As a result, the producers were forced to also reduce the selling prices of wheat bran. It should also be noted that in addition to demand, reduction of the cost of purchasing of raw materials to produce flour assisted to wheat bran to become cheaper. Due to the current situation, market participants noted that the continued low demand for wheat bran gradually led to the fact that the production began to accumulate in storehouses. In order to avoid overstocking, in some cases grain processors have to make price concessions to customers or reduce production volumes of the milling products.
In October last year, the situation on the market of wheat bran changed. Grain processors slightly increased the minimum selling prices for wheat bran. According to market participants, the situation was caused by the increase in prices of feed grain group. Due to the increase of costs for purchasing of grains, buyers once again turned their attention to wheat bran. However, the price increase did not last long and by the end of October the price situation on the market stabilized. The rates of trading and purchasing activities during the period were described as relatively stable. Buyers mostly purchased the products as required.
In November-December 2011, the price situation on the market of wheat bran did not change significantly. Selling prices for the products varied within the previously formed ranges. The demand for wheat bran remained stable. Market participants noted that sales of such products were realized to primarily loyal customers. It should be noted that the Southern region showed more active demand in wheat bran, due to the fact that many export companies need to reduce the cost of shipping goods to the ports. That is why traders were trying to purchase the necessary volumes of wheat bran from local producers.
The first half of the current MY has ended, and it may be noted that the market of wheat bran is largely characterized by widely differing price trends. Lowering of prices, then a slight increase, and subsequently stabilization – such scenario of the situation forced flour millers to keep abreast in order making timely decisions to maximize profits. However, the marketing year is not over yet, and thus there will be more hard work. Taking into account that in the current season due to the good harvest of grains, there will be no lack of feed grain offers on the market, and we can hardly expect for the increase in demand for wheat bran in the second half of the season.
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