Development of events on the Ukrainian market of feed grains rather often reminds the scenario of the game with the open final. All the roles are distributed, the main heroes are chosen, but at the end of each part instead of the logical point they have to set up indefinite and intriguing ellipsis. There is the impression that everyone decides by himself, what will be the final. Well, or at least a lot of would like to think like that. However, it is not so simple. For example, there is the feed maize market.From year to year the grain holds the leading positions for demand level from the side of the domestic consumers, as well as from the export-oriented companies. The current MY was not the exclusion. By the way, in the current season grains general production faced rather good results. However, despite the good crop volumes and the consumer activity, the market did not escape the surprises and unexpectedness.
In 2010, the sowing areas increase for feed maize justified the expectations of a lot of experts and the market participants. Thus, according to the final data of the State Statistics Committee of Ukraine, the grain general production totaled 11.9 mln tonnes, up 11.8% compared to the last year results. But taking into account the weather situation during maize maturing, and also the harvesting campaign, more than once used to correct the course of events. Nevertheless, the received crop volumes allowed satisfying the domestic and the export potential of the country.
From the beginning of new crop grain coming a lot of agricultural producers did not hurry to sell large-scale volumes of the grain. Rather often agrarians used to realize maize, when it was necessary for fulfillment of the current assets, the part of which was spent during the period of the harvesting campaign. On their turn, the range of the processors also did not hurry to purchase new crop grains. The buyers explained it by awaiting for the price situation stabilization on the market, and also the supply volumes increase from agrarians. Despite the stated fact, many market operators used to estimate the rates of the trading-purchasing activity as rather active. A lot of domestic consumers purchased the necessary volumes of feed maize for work. However, the processors used to note that the level of purchasing and sales prices on the domestic market directly depended on the demand prices level of the export-oriented enterprises. Thus by the end of September 2010, the purchasing prices of traders rather often had the level of 1.56-1.58 thsd UAH/t FOB, meanwhile the maximum prices of the demand of the domestic consumers totaled 1.55 thsd UAH/t FOB.
The further events development has brought many surprises. The first of them was published on October 19, 2010, as the Decree of the Cabinet of Ministers about grain export quotas imposition in Ukraine, including feed maize. The current Government decision was unexpected for a lot of market participants. In the current MY wheat and barley crop volumes level was lower, compared to the previous year level, but maize harvest volumes increased the rate of 2009. Taking into account the stated data, a lot of market participants stated it is unreasonably to impose maize export quotas. However, no one was successful to contest the decision of the Cabinet of Ministers.
Despite the fact the main competitor of the domestic consumers temporarily was out of game, the buyers were not able to decrease the prices essentially. A lot of agrarians unwillingly allowed to the prices to come down and used to sell the small-scale parties of grains, while waiting for more profitable market conjuncture.
After the term of grains export quotas imposition prolongation and distribution of the additional quotas for grains volumes, the feed maize demand faced the essential increase. The range of the export-oriented companies renewed grains purchasing. Meanwhile, the prices of traders demand essentially increased the purchasing prices of the domestic consumers. The current situation was caused by the prices increase and the consumer interest in feed maize on the world market. On the base of the current demand activation for grains from the side of the different groups of buyers the owners of feed maize immediately enlarged the sales prices. Moreover, in the range of cases agrarians offer prices faced the growth by 200-300 UAH/t. Thus, if in the beginning of January the maximum sales prices used to total 1.8 thsd UAH/t FOB, then by the end of February 2011 the prices enhanced level to 2.1 thsd UAH/t FOB.
In the current market conditions, a lot of processors rather often used to announce about the difficulties with formation of the necessary grains volumes, At first the supply volumes of feed maize always used to be limited. Secondly, for the range of combined-feed producers the essential sales pries were too high, due to the fact the range of the enterprises had to stop their activity.
As of to date, the situation on feed maize domestic market is rather stable, though non-significant prices growth for grains still has place to be. Mainly the agrarians, who used to announce the prices level close to the minimum, correct prices to the increase side. At the same time, a lot of domestic consumers continue to talk about not enough volumes of grains on the market due to the fact the agricultural producers do not hurry to activate the temps of feed maize sales, despite the close of spring-field works. While talking about the consumer demand during the current season, we should take into account that the main buyers of grain became hog-breeding enterprises and poultry enterprises. By the way, too high sales prices for feed barley caused the barley purchasing share decrease in favor of wheat and maize. All the above stated facts allow us to consider maize as the major grain crop in the segment of feed consumption in Ukraine.
It is rather difficult to forecast the further events development on the domestic market of feed maize. The spring-field works’ start, on March 31, 2011, is the deadline for the duration of grains export quotas regime, and in what conditions will the market have to work after the stated date, it is unknown. However, while estimating all the development prospects, the market operators first of all remember about the fact that one of the main scenarios of the market relations in the sector of agriculture of Ukraine is still the Government. And unfortunately it is almost impossible to foresee the ideas of this "author".
Svetlana Protsyv,
expert of the Ukrainian market of feed grains of APK-Inform Agency
