Exclusive privilege of the Ukrainian market of wheat bran




In the current season almost every article on the Ukrainian grain market used to show the essential prices increase. The current material will not be the exclusion. After the analysis of the price tendencies, which used to be incidental to the market of wheat bran, it is possible to state that during the essential part of the season the offer prices faced growing trends. At the same time, there were the certain periods, when the monthly prices increase totaled nearly 400 UAH/t.

The current season was rather stressful. At the same time, during its essential part the situation on the wheat bran market was rather stable, at least compared to other grain market segments. It is possible to state that even during the hardest times for the market of flour and grains, wheat bran market was working according to its usual schedule. At least the Government measures for "situation stabilization" did not face the segment directly. Even in the beginning of the season, when all the export operations were under the hard Government authorities regulations, the market of wheat bran was provided with the exclusive right for independent work. Market operators had to pay attention to the market aspects only for their cooperation planning.

As it was above stated, the main season trend was offer prices increase for wheat bran. It is possible to state that keeping the active demand for the end products from both domestic and export-oriented companies was the main reason of the situation development. We should note the most active offer prices increase for wheat bran was in January-March 2011. Market participants stated, during the reported period the market faced the essential prices increase for feed grains, caused by the supply volume decrease. Feed grain supply volumes shortage caused the fact that wheat bran producers had the opportunity to rise the products sales prices. Market operators stated that agrarians did not have the possibility to realize grains at the acceptable prices for them, they preferred selling the minimum volumes of grains, which made the consumers to revise the purchasing structure, as a result it caused the stable interest for wheat bran purchasing. It is necessary to note that the milling wheat prices essential increase affected wheat bran market situation development during all the season. The fact is that grain prices increase certainly influenced on wheat flour prices level. At the same time, it was rather difficult to rise prices for it due to the Governmental authorities tries to hold prices for the stated products, and caused the certain prevarications which did not allow to initiate the prices increase during the stated term. So wheat bran did not cause the essential interest of the control authorities, which allowed to the producers to increase prices for the stated products. Sometimes flour producers stated that during the certain periods wheat bran was the only product they were able to realize.

We should also note that the situation on the flour market influenced on wheat bran production volumes. In particular, in beginning of the season flour milling products were not exported, the domestic market faced the certain flour supply volumes surplus which caused its production volumes decrease. Wheat bran production volumes also faced a decrease, caused by the demand boom. At the same time there was no shortage of the essential supply volumes.

To date there is the satisfactory demand for the end products on the base of the offer prices level saving. So it is possible to resume that in the current season demand activity will be higher during the period of April-May 2011 as opposed to the same period in 2010.

As about wheat bran market work in the season, it is necessary to pay the essential attention on the price and trade tendencies which were on the export market. In the current MY the sales activity was also rather high on the market. Though, of course during the stated period there was the demand increases and decreases. At the same time, the export volumes during the period of July 2009 – August 2010 and July 2010 – August 2011 were almost in line. But the geography of the main products consumers changed. Thus, in 2009/10 MY the lost of the main buyers of wheat bran included Turkey, Morocco. Egypt and Vietnam. In the current season there were Turkey, Tunisia, Egypt and Morocco. We should note that in line with the satisfactory rates of wheat bran realization on the export market during the most part of the season there were the offer prices increase. Thus, according to data of APK-Inform Agency, in May 2010 wheat bran offer priced totaled 85 USD/t FOB, and in May 2011 they totaled 203 USD/t FOB.

To date the sales activity the market participants estimate at the satisfactory level, and report that the range of the traders are still on the stage of the parties formation in order to renew supplies during the nearest time.

Wheat bran market trade activity temps were at rather high level in 2010/11 MY. Processors were able to realize the bran on the domestic as well as on the foreign markets at the acceptable pries for them. Actually the market was aside from the constant contributions of the grain sellers and buyers, it was away from the export limitations and restrictions. During all the season the trade-purchasing activity on the bran market depended mostly from the market conjuncture. To compare the bran market work with the work of the other segments of the Ukrainian grains market it is possible to note the essential contrast. This is the only case when the season is finished in the positive mood. It is still difficult to talk about the market development prospects, however the market participants do not see any negative factors which are able to spoil work till the end of the current season. Next MY everything may be changed.

Olga Pryadko,

head of the grain market department of

APK-Inform Agency