The article focuses on the results of the eleventh international conference "Grain Forum - 2012: Production, Processing, Trading", which was held on June 6-8, in Yalta (hotel Palmira Palace).
June is the special month for the grain market participants. First of all, it is the boundary between two seasons, when there is an opportunity to sum up the results of the marketing year and talk about the prospects of the new grain season. Besides, in June agrarians end planting spring grains and leguminous crops, and start harvesting winter grains. According to data of the Ministry of Agrarian Policy and Food of Ukraine, as of June 1 Ukraine completed planting spring grains and leguminous crops. The planted areas of spring crops totaled 8.94 mln ha. Since June 11, 2012, the harvesting campaign started in Ukraine. Agrarians started harvesting winter barley, and according to APK-Inform, since June 15 some regions of Ukraine also started harvesting winter wheat. To date all members of the grain market are closely watching the weather conditions, and ask themselves what will happen to the crop?
It should also be noted that in June 2012 the first trading of the Black Sea wheat futures on the Chicago Mercantile Exchange started.
But not only these events emphasize the first month of the summer. In June there was held the event, which already became a tradition for many members of the grain market. APK-Inform Agency as the organizer of the conference, preparing the ground for the meeting of representatives of the grain market, aims to reach the maximum highlighting of the most important issues for representatives of all segments of the grain market - from agricultural producers to traders, taking into account the problems of logistics, processing, financing and other segments, involved in functioning of the market. Therefore, the event program was focused on the production, processing and trading. But during discussion of each topic, the grain market still remained the main "hero" of the program and the entire event. During Grain Forum -2012 (June 6-8, 2012) world-class experts, leading experts of the Ukrainian market, large-scale agricultural holdings of Ukraine, agricultural producers, traders, grain processors, bankers and lawyers discussed the problems of the grain market, summed up the year results, analyzed and built forecasts of the future harvest and prospects of the market development in the new season.
The conference program in the current year was somewhat unconventional and very saturated, not only in the sphere of information richness.
First of all, unconventionality of the program began from the first day of the conference, which should be devoted to the main tendencies of the Ukrainian and world grain markets, according to long-established rules of the event. But on June 6, 2012, the CME started the first trading on the Black Sea wheat futures, and the special theme was coincided to the event, which opened the Forum - development of the Ukrainian exchange market. It was a training event on development of the Ukrainian stock market and stock market tools, used by members of both global and domestic agricultural markets. Representatives of the Agrarian Exchange, ODA Ukraine (Offre & DemandeAgricole), CME Group, INTL FCStone became the speakers.
The speakers of the Agrarian Exchange concentrated on development of the Ukrainian stock exchange market, usage of spot, forward contracts, and launching of the electronic trading system on the Agrarian Exchange. According to Alexander Maryukhnich, Director of the Agrarian Exchange, his organization looks for developing of the national stock exchange commodity market by the world standards. The mechanisms of provision of realization of the transactions concluded at the Agrarian Exchange, and the system of electronic trading will allow to the market participants to sell and purchase agricultural products as quickly as possible and with minimum risk. Along with development of the commodity exchange market of Ukraine, specialists of the Agrarian Exchange will offer the latest tools of the stock market, which are already used by the developed world markets. For example, these include futures, options, and many others. The Ukrainian market still has the following characteristics:
- conclusion of new contracts for the available commodities only on the spot, sometimes forward terms;
- presence of the price volatility, which hard beats the profitability of farmers;
- uncertainty of agrarians in usage of the exchange market mechanism, due to the lack of guarantees for deliveries in the quantity and quality specified in the contract;
- price formation usually occurs in the chaotic regime without the possibility of forecasting, which increases the risks of working in the agricultural sector;
Elena Pastarnak, consultant on price risk management of ОDA (Offre&DemandeAgricole), complemented the theme of the stock market in Ukraine, which in her report commended the success factors of functioning of the markets of futures contracts, and allocated them to the benefits for market participants and the Government as a whole.
Alexander Bobylev, representative of CME Group, concentrated on the tools for the price risk management of the CIS grain market: His report was focused on the futures contracts for wheat from the Black Sea region. According to him, on the Chicago Mercantile Exchange traders already concluded three contracts at the price of 254.5 USD/t. These contracts were registered and subject to all rules and regulations of the Chicago Mercantile Exchange as a continuation of the Memorandum of Understanding which was signed by Leo Melamed, Honorary President of CME Group, in 2011. Matt Ammermann, Commodity risk management consultant on Eastern Europe, INTL FCStone, provided his own presentation on hedging in the Black Sea region and INTL/FCStone™`s approach to managing commodity price risks.
The key themes, discussed in the following two working days of the Forum, included tendencies of the world grain market in the season-2012/13, the prospects for the Black Sea grains (Russia, Ukraine) in the new season and the condition of the infrastructure of the grain market of Ukraine. Presentations of Teresa McKeivier, Senior analyst of the United States Department of Agriculture (USDA), and Leandro Pierbattisti, analyst of France Export Cereales, provided highlighting of the major trends of the global market in the new season. According T.McKeivier, development of the world grain market in the season-2012/13 will be affected by a number of factors and, above all, the weather, export opportunities for the Black Sea region, the situation on the wheat market in India, Government interventions and the maize harvest in the United States. Egypt and Indonesia will remain the leading importers of wheat in the new season.
Leandro Pierbattisti was sure despite the record dry weather, the situation with the wheat production in France will not be so bad owing the stable yield of the grain. In 2012/13 MY wheat crop in France will total 34.2 mln tonnes.
In 2011/12 MY Russia provided the record export volumes of grains- nearly 27 mln tonnes, including 20 mln tonnes of wheat, stated Andrew А. Sizov, Executive Director of the competence center SоvEcon. He noted that in the current year the exporters provided significant attention on maize trading, which export volumes totaled over 2 mln tonnes. According to the expert, in the future maize may become the second most important export item after wheat, shifting barley to the third place. In 2011/12 MY Egypt, Turkey and Yemen became the major importers of Russian wheat. A.Sizov also said that the rates of spring crops planting in 2012 exceed the last year ones. At the same time, the adverse weather conditions played its role, but if the current situation in the Southern and Central regions and also in the Volga region is rated as moderately negative, the drought in the Urals and Siberia causes rather great fear. In late May, SovEcon corrected its forecast for the harvest results. Thus, in the current year the general grain production in Russia is expected to reach 87 mln tonnes, including 53 mln tonnes of wheat. At the same time, A.Sizov noted that if in the next two weeks the Eastern region - the Urals and Siberia - does not face rains, these figures may be reduced.
According to forecasts of APK-Inform Agency, in 2012/13 MY Ukraine is expected to reduce the general grain harvest by 19% compared to 2011 - to 46.14 mln tonnes, announced Rodion Rybchinskiy, Head of the business-projects department of APK-Inform Agency. According to him, in the next MY Ukraine should expect for reduction of the domestic food consumption of grains by 4% compared to the present year. In the current MY the domestic consumption of milling grains totals 5.56 mln tonnes, in the next MY the index will reduce to 5.35 mln tonnes. At the same time, Ukraine will increase usage of grains in the alcohol industry, due to the fact that the Government accepted the draft law, according to which since January 1, 2013, ethanol content in fuel must be at least 5%. At the same time, R.Rybchinskiy noted that Ukraine to face reduction of feed usage of wheat and barley in the terms of rising of maize and soybean meal usage for feed aims.
In 2012/13 MY, the price situation on the Ukrainian market of grains will be stable, announced Sergei Petrenko, Deputy Director of the department of economic development and agricultural market of the Ministry of Agrarian Policy and Food of Ukraine. He said that the price situation on the grain market will be stable due to rather large carry-over stocks, which will total nearly 12 mln tonnes of grains, including 8 mln tonnes - wheat, 3 mln tonnes - maize, 1.2-2 mln tonnes - barley, depending on the quality indicators. According S.Petrenko, the situation in the next season will allow avoiding significant fluctuations of grain prices in Ukraine. The global trends will also have own effect on formation of prices in Ukraine.
In the current year Grain Forum -2012 was attended by 190 participants from 125 companies. The geography of participants was represented by 13 countries. Annually the number of agricultural producers and agrarian holdings among the conference participants is growing. In 2012 our event was attended by representatives of the largest national agricultural holdings: Ukrlandfarming, Harvist-Holding, Nibulon, Mriya Agroholding, MHP, Agroholding "August" and many others. We hope that at our next event the number of companies-producers of grains will continue increasing. And grain traders became the other segment, best represented at the conference: Khlib Investbud, Trading House "Privat", CHS Ukraine, Poligrain Agro, Zerno-Trade, etc.
Editor in chief of APK-Inform Agency