Last season was quite difficult for all participants the agro-industrial complex, especially the fat-and-oil industry. Reducing of the general harvest of sunflower seed and, consequently, decreasing of the production volumes and exports of sunflower oil, low bid prices for vegetable oils on the world market, foreign currency fluctuations on the domestic market, etc. - such factors provided its significant impact on the fat-and-oil market segment. But despite many challenges, Ukraine continues demonstrating its desire for new achievements. Within frames of the Fourteenth international conference "Fat-and-Oil Industry - 2015" representatives of all spheres of the reporting industry managed to discuss the last season problems, share their experience of work in difficult economic conditions.
In the current year, the conference "Fat-and-Oil Industry - 2015" took place in Odessa, which provided its specific features to the event and greatly expanded the range of participants. Over 350 conference participants from 25 countries attended the event.
Representatives of logistics, surveyor and inspection companies were among the current year delegates. Traditionally, the conference was attended by representatives of the industry associations, major producers and exporters of fat-and-oil commodities, key importers, traders, producers of oilseeds, representatives of law firms, etc.
The company Syngenta became the General sponsor of the conference. Sponsors of the event - the companies Delta Wilmar, Stark Shipping, AVES, Intertek, Nertus, AlphaCosta. The industry association Ukroliyaprom provided its support to the event. International legal offices Interlegal became the conference partner.
The specialized mini-exhibition within frames of the event caused considerable interest among participants of the conference. In the current year, companies-producers and suppliers of technical equipment for the fat-and-oil industry from the Czech Republic, Germany, Turkey and other countries visited the exhibition.
Speech by the guru of fat-and-oil industry of Ukraine - Stepan Kapshuk, General Director of the association Ukroliyaprom, was the first one during the conference day. The expert noted that in 2015/16 MY, Ukraine will keep its position as one of the world leaders in production of sunflower seed with the forecasted index at 11 mln tonnes. According to him, achievement of the reporting indicator will provide the general production of sunflower oil in Ukraine in the current season at the level of 4.5 mln tonnes, including 4.1 mln tonnes for exports. As for the forecast on production of other types of vegetable oils in Ukraine in 2015/16 MY, S.Kapshuk said that the Association estimated soybean oil production at nearly 200 thsd tonnes, and the exports - 180 thsd tonnes, rapeseed oil - 150 thsd tonnes and 120 thsd tonnes, respectively. Thus, in 2014/15 MY the general production of vegetable oils in Ukraine in 2015/16 MY will increase to 4.83 mln tonnes, against 4.491 mln tonnes in 2014/15 MY, and the export volumes – to 4.4 mln tonnes, against 4.112 mln tonnes, summed S.Kapshuk.
The Regional head of the AGRI direction at Cotecna Ukraine Limited, Olga Tovkun forecasted that in 2015/16 MY, the production volumes of sunflower oil in Ukraine will vary within 4.2-4.7 mln tonnes, which will allow providing the export potential at the level of 3.7-4.2 mln tonnes. The forecast is based on the fact that the domestic consumption of sunflower oil in Ukraine covers nearly 10% of the produced volumes, and the exports – nearly 90%, explained the expert. Also, achievement of the reporting indicator will allow to Ukraine to keep its leading position on the world export market of sunflower oil, which share reaches nearly 54.3% (3.7 mln tonnes). India is the main buyer of Ukrainian sunflower oil, and covers 41% of the export structure. The EU countries purchase nearly 12% of the reporting volume, China - 10%, Iran - 7%, Egypt and Spain - 5% each, said O.Tovkun.
The trader at OREXIM Group of Companies, Elena Tkacheva reported on the selling prospects of Ukrainian fat-and-oil commodities to the Chinese market. Despite the measures taken by the Chinese government for sunflower domestic producers stimulating, the sun oil domestic market remains import-dependent, which opens up good prospects for Ukrainian exporters of these products. She also recalled that in recent years, China has seen a significant upward trend in the number of middle-class population, which is a major consumer of sunflower oil, and therefore the country's demand for these products will continue growing.
The Managing Partner at Amadeus Marin Ltd., Maria Solyanik stressed that careful scheduling of cargo transportation in partnership with the forwarder, PJSC Ukrzaliznytsia and rolling stock operator, is one of the major ways to increase the processing capacities of the terminals working with vegetable oils in the sea ports of Ukraine. Routing of the shipping operations, reducing of delivery time, increasing of the rail cars turnover, as well as improving the safety of traffic, will become the direct results of such careful scheduling, said the expert. At the same time, she stressed that both loaded and empty rail trips have to realize scheduling operations. Development of the certain route schedule for each unloading terminal allows effectively organizing the usage of rolling stock and increasing of the traffic volumes. Correct and optimum realization of the scheduling works, and organization of cargo shipments will maximize the route transportation traffic, avoid counter flows of cargoes, repeated yard operations with rail cars, etc., which would eventually become the basis for revision of railway tariffs towards reduction, summarized M.Solyanik.
The second conference day focused on production of alternate oilseeds, its treatment, etc. The General Director at Enlightening production and commercial firm “SIAIVO” Ltd., Nikolai Shkurko informed that during 10 recent years, the production volumes of flaxseed in Ukraine increased to 40.8 thsd tonnes in 2014, as opposed to 28 thsd tonnes in 2005, due to extension of the planted areas (34 thsd ha, against 26 thsd ha), and increasing of the oilseed yield (1.23 t/ha, against 1.12 t/ha). At the same time, he stressed a number of problems, which slow down further development of the flaxseed industry in Ukraine. In particular, the list of problems includes some deficit of high-quality seeds of early generation, non-observance of the required agricultural methods of cultivation, low liquidity of the finished product, unstable and low demand of the oilseed processors, as well as availability of the export duties.
Taking into account impact of the reporting factors, to date the market of flaxseed in Ukraine maily shows its export orientation, unstable production indices, and does not have well-developed infrastructure. But at the same time, the market segment has the certain prospects which can be realized only in terms of coordination of business activity of all market participants. Therefore, foundation of the specialized trade association of Ukrainian flaxseed producers would promote the effectiveness of such coordination in many ways, said N.Shkurko. As for the forecasts for 2015/16 MY, the expert noted that the total supply of the oilseed in Ukraine is estimated at 56.2 thsd tonnes. In particular, the domestic consumption will reach 16.5 thsd tonnes (including the processing at oil - 9.6 thsd tonnes), the exports - 37 thsd tonnes, ending stocks - 2.7 thsd tonnes, added N.Shkurko.
The analyst of APK-Inform Agency, Andrew Kupchenko reported on the market of rapeseed and its by-products. Rather difficult agro-climatic conditions observed in Ukraine during the autumn planting camapign, caused some reduction of winter rapeseed planted areas for the harvest-2016, to 626 thsd ha, a decrease of 29% compared with last year results (885 thsd ha). Also, the expert noted that to date, it is rather difficult to estimate the future harvest volumes of the oilseed in Ukraine, because during several recent years there were observed significant fluctuations of the losses results, which, for example, in 2012 reached 50%, in 2013 - 6%, and in the current season the index totaled 25%. Thus, in terms of the optimistic forecast of winter rapeseed areas losses for the harvest-2016 (at 15%), and formation of the yield at the average level of 2.16 t/ha, the general harvest of the oilseed will reach 1.1 mln tonnes, down 35% compared with the current season (1.7 mln tonnes), said A.Kupchenko. In addition, the speaker noted that winter rapeseed forms nearly 95% of the oilseed harvest volumes in Ukraine, and 32% of the planted areas are located in the zone of risky agriculture, which makes the announced forecast as fairly optimistic. During three recent seasons, Ukraine continues steadily increasing the production volumes of rapeseed oil. In particular, the forecast of production of rapeseed oil production in Ukraine in 2015/16 MY totals 129 thsd tonnes, up 29% compared with the previous season (105 thsd tonnes). At the same time, Ukraine exports almost all produced volumes, the expert said.
The oilseed market analyst at APK-Inform Agency, Anna Burka covered the market of soybeans. In the short-term outlook, the soybean market will become one of the most dynamically growing segments of the oilseed market of Ukraine. High demand for the oilseed, and favourable weather and climatic conditions contribute to the further increasing of soybean production in the country - in 2017/18 MY, the planted areas will increase to 2.3 mln ha, and the general harvest - 4.6 mln tonnes, said the analyst. In addition, A.Burka stressed that Ukraine has all required prerequisites for increasing of soybean processing volumes, namely launching of new production lines and modernization of the existing ones, and there is a high import demand for soybean by-products. As a result, in 2017/18 MY Ukraine is able to increase soybean processing volumes to the record level of 1.5 mln tonnes, the expert added. Also, A.Burka noted that the absence of export duties, geographic proximity of Ukraine to the major importers , and good logistics capabilities, create the excellent conditions for strengthening of Ukraine's position on the world market of soybeans. According to her, the above mentioned factors allow achieving another records in the exports of soybeans from Ukraine – nearly 2.5 mln tonnes.
The Head of Marketing Department at the agri-industrial holding Astarta-Kyiv, Irina Shadyuk reported that to date, development of the market direction of soybean deep processing is rather promising for the Ukrainian market segment of the reporting oilseed. Intensification of competition for both raw materials and consumers is the main factor determining the further development of soybean domestic market. In such terms, oilseed processors are looking for new opportunities and directions, which also cover development of the market direction of soybean deep processing, said the expert. According to her, increased consumption level of the commodities of soybean deep processing (especially soy protein) in the world, high potential of import substitution of such commodities, as well as its high cost, form the high attractiveness of the trend. At the same time, I.Shadyuk noted that development of soybean deep processing requires additional consideration of some important features of the market segment. In particular, it is important to comply with the NON-GMO standard. Also, in terms of high-protein foodstuffs production there is required availability of its own laboratory for qualitative and operative control for compliance of the resulting commodity content with the announced quality and customer requirements. It should be also taken into account the need for strict observance of the declared qualitative indicators, and a number of other features.
At the end of the conference, the company Agritel provided its training “Futures markets in the oilseed complex”. During the training, conference participants discussed a number of issues: features of the futures markets, various hedging strategies, Contracts of NYSE, EURONEXT and CME Group, and various others.
Summing the results of the conference event, on behalf of the APK-Inform team, I express sincere gratitude to all conference partners and sponsors for their assistance in organizing and conducting the event.
Anna Platonova, Head of the organizing committee, APK-Inform