Ukrainian market of feed barley

Source

APK-Inform

3258

This MY was rather mixed. There is the point to tell about everything in order and pay attention probably at the most bright representative of the Ukrainian feed market – barley.

Almost everyone remembers about rather difficult weather conditions, which the Ukrainian agrarians faced in 2010. At first long-term spring frosts, then the hot summer caused the droughts, and during the period of the harvesting campaign of winter sowing – heavy rains and winds on the most territory of Ukraine. These weather conditions were the reason of the harvesting campaign temps delay. Of course these factors effected the grains and legumes crops, so a lot of market operators had to calculate the large losses. However despite the fact of the certain crops yield decrease, the general volume of harvested grain the experts estimated as the sufficient to satisfy the domestic consumption and to save good export potential.

While talking about feed barley market, according to the preliminary data of the Committee of Statistics of Ukraine as of November 1, 2011 grains production volumes totaled 8,9 mln tonnes (without processing) meanwhile the harvesting area totals 4,3 mln ha, much less compared to the last year result. That time, according to the operative data the agrarians harvested almost 12,3 mln tonnes (without processing) of feed barley throughout 5 mln ha. Paying attention on the data it is possible to assume that the reason of grains yield decrease was not only the weather factors, but the sowing areas decrease almost by 13.8%.

Realities of the first half of the season

About barley shortage on the market the domestic consumers announced in the beginning of the MY. Believing in new crop grains, a lot of buyers had to face the reality, due to a lot of grains owners did not hurry to realize it by large parties, but mostly on the contrary, delayed sales. The agrarians noted that the main reasons of the situation were spring barley production volumes decrease, and also grains availability with the low level of quality parameters, which are not in accordance with GOST (all-country state standard), and demand prices were too low according to the agricultural producers' opinion. Due to the fact, the processors in the most cases had to work with early formed grains stocks, by fulfilling them from time to time by small or middle-scale parties.

During the short terms (the end of summer – the beginning of autumn) the situation on the feed barley market became much worse: grain demand essentially exceeded its offer due to the fact the interest in grains purchase was faced as by the domestic consumers as by the export-oriented companies. We should not forger that barley for Ukraine is still one of the strategic crop as for the export, along with maize and wheat. As a result of grain demand activation the prices faced the essential increase. Thus in October the sales prices of the agrarians totaled the level of the maximum high rate – 1.82 thsd UAH/t. At the same time, purchasing prices of the domestic consumers also were not still and during the stated period reached the level of 1.72 thsd UAH/t EXW, and the demand prices of export-oriented companies – 1.75 thsd UAH/t on the same conditions. The price picture caused rather bright emotional reaction of the buyers. However they were not able to introduce any corrections into the current situation. However we should note that even quotas' imposition for grains export in the middle of October 2010, including feed barley, did not favor the situation cardinal change: sales prices continued growth, and grains volumes still were limited.

At the same time, closer to the end of 2010 the agrarians face grains demand decrease from the side of the domestic consumers, including export-oriented companies, which rather often do not fact the active interest for grains purchasing due to main volumes for export were formed earlier.

It is necessary to note that despite the barley demand activation decrease, its prices continued to grow. The initiators of the current tendency are grains owners who slowly, but steadily increase offer prices. Due to the fact, the buyers who urgently need to fulfill grain stocks have to increase demand prices. At the same time the certain consumers state that a lot of buyers have no possibility to purchase barley at such high prices level.

National demand characteristics

It is necessary to say a few words about feed barley main buyers this season. The most bright consumers of feed barley are still pig breeding enterprises, and also combined-feed producers. Though the last ones due to the fact of the sales hike increase and the necessary offer volumes absence stop barley purchasing increasingly, and when it is possible they try to place it by other feed grains. Cattle-breeding enterprises face more difficulties. According to the specialists you may change the feeding ration till the certain level, so they cannot abandon from barley purchasing at all. We would lie to note that groats producers inform about feed barley purchasing problems. Too high grains prices are still a barrier for them.

This MY rather large interest for grains purchasing started to face the beer enterprises. The reason is that beer barley yield essentially declined, so they have to form the necessary volumes with feed barley. And as it is known there is not a lot of it on the market.

Resuming

Grains market stepped into the middle of the season. The second half of the MY is expected to be rather tighten, due to the fact barley volumes on the market face a decrease. Taking into account that grains offers shortage was felt from the beginning of the season, the range of the buyers do not exclude that demand prices may continue to grow. At the same time the range of processors state the opinion that demand prices may face a decrease during the nearest time, due to the fact that agrarians will start to realize grains in spring, The reason of the situation can be the grains qualitative parameters decline, which will not be able to provide the necessary storing conditions, which will make them to improve sales temps. However to date the market participants do not note any changes.

Svetlana Protsyv,

expert of the Ukrainian market of feed grains

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