In the current year, Kyiv became the venue for meeting of the leading players of the fat-and-oil industry of Ukraine and the world, because it is the major business capital of Ukraine. For a long period, the conference "Fat-and-Oil Industry" has worked as an excellent discussion platform for oilseeds producers and crushers, and traders. From one year to another, the geography of participants continues expanding, because fat-and-oil products find new sales markets, as well as the conference topics develop, due to emergence of significantly important industry issues.
Busy agenda of the event became a great opportunity for all market participants to strengthen their partnerships, become like-minded colleagues in the industry in order to solve various relevant problems, and determine the priorities for the season-2017/18.
In the current year, the list of participants included representatives of industry associations, large-scale producers and exporters of fat-and-oil products, representatives of freight forwarding, surveyor, logistics and inspection companies, etc. Also, agricultural producers, key importers of fat-and-oil products, traders, oilseeds crushers, representatives of agricultural holdings and legal companies, take part in the conference work.
The company Syngenta became the General sponsor of the conference. Syngenta is one of the leading global producers of crop protection products. Cotecna became the sponsor for quality, it is one of the leading global independent inspection companies. Conference sponsors: Farmet - manufacturer of technical equipment for the fat-and-oil industry, and UPSS Terminals - port operator, which has the large-scale export and import bulk liquid filling terminal in the Black Sea region. International Law Offices, Interlegal was the Legal partner of the conference. The key industry association of Ukraine - Ukroliyaprom, provided its support for the event.
In the current year, a traditional mini-exhibition was attended by manufacturer of technical equipment for oilseed and its by-products processing and storage.
In the first part of the session day, there were reports about the Ukrainian market of oilseeds and by-products, as well as the useful properties of high-oleic oil. In addition, the agenda focused on the issues of rail and container traffic, and various legal aspects of trade relations. The session day started with a report of the General Director of the association Ukroliyaprom, Stepan Kapshuk, who in the very beginning of his presentation noted that in 2017/18 MY the general harvest of sunflower seed in Ukraine will reduce by nearly 8% compared with the previous season - to 12.5 mln tonnes. According to him, a significant decreasing of the yield indices of Ukrainian sunflower seed to 2 t/ha, as opposed to the last year level at 2.24 t/ha, will become a determining factor in reduction of the production volumes. But increasing of sunflower seed areas in Ukraine in 2017 by 2% compared with the previous level, to 6.075 mln ha, will become a certain compensation of the reporting changes. However, the high planted areas will fail to completely neutralize the effect of reduced yield indices.
Also, the speaker said that in the current year Ukraine will reduce the general harvest of soybeans by 13% in comparison with the figures of 2016, to 4 mln tonnes, mainly due to decreasing of the yield – from 2.31 t/ha, to 2 t/ha. At the same time, in the current season the production of rapeseed is expected to significantly increase by 90%, from 1.142 mln tonnes, to 2.15 mln tonnes. Ukraine will increase the oilseed production due to both growing of the yield indices (from 2.57 t/ha, to 2.76 t/ha), and significant enlargement of the harvested areas, from 448.8 thsd ha to 778 thsd ha, added S.Kapshuk.
Also, the General Director of Ukroliyaprom Association expressed his view that the main trends and features, which were typical for the Ukrainian oilseed market in 2016/17 MY, will remain quite relevant for the current season. Continuation of the growth rates in production and supply of raw materials became the major feature of the Ukrainian oilseed market, despite the observed decline in prices and growth of consumption rates. At the same time, not only the global market (continuation of the global crisis in the international economics, decline of prices for vegetable oils, etc.), but also the domestic problems of Ukraine, made its effect on development of the trend, said the speaker.
In particular, 2017/18 MY still demonstrates the complete dependence of Ukrainian raw commodity markets not only on the global market situation and weather conditions, but also on fluctuations on the foreign currency market of Ukraine. Also, S.Kapshuk drew attention to increasing shadow trends of the Ukrainian oilseed market. To date, domestic agricultural producers are mainly trying to sell sunflower seed for cash, which significantly disturbs the situation on the veg oil market, leading to its shadowing, and slows down sales or processing on a give-and-take basis, said the expert.
However, S.Kapshuk called the existing export duties on sunflower seed, which provide the Ukrainian domestic market with stable supply of raw material volumes, and also stimulate new investments in efficient re-equipment processes, as a positive factor. The main tool for further stable development of the fat-and-oil complex of Ukraine is keeping of the export duties on sunflower seed, as well as increasing of the processing rates of soybeans and rapeseed, added the speaker.
The Head on development of business solutions for agricultural processing in the CIS countries at Syngenta, Sergei Tymoshenko, reported that Syngenta, which is the largest company-producer of oilseed seeds in Ukraine, plans to increase its presence in the reporting market segment. To date, almost every third bottle of Ukrainian sunflower oil is produced from oilseeds of the company Syngenta. But the company plans that at least every second bottle of the product should be produced from oilseeds of the company Syngenta, he said.
According to S.Tymoshenko, to date Syngenta proposes Ukrainian producers to purchase a high quality range of seeds with the level of pre-treatment of seeds at more than 50% in the segment of herbicide-tolerant sunflower, and over 60% in the segment of high-oleic sunflower. Also, the company continues increasing intensification rates of the production, and works out to increase the share of high-yielding hybrids with high oil content, while using innovative technological solutions. At the same time, Syngenta pays high attention to improvement of the supplies, diversification of its production capacities, technical assistance of producers, and development of regional examination, the expert added.
The Associate partner at Global Ocean Link, Pavel Mirzak, reported about the market segment of container shipments of vegetable oils from Ukraine. In 2016/17 MY, the share of sunflower oil in the export container shipments of vegetable oils from Ukraine increased to 90%, as opposed to 67% in the previous season. At the same time, in the reporting season the share of vegetable oils shipments in flexitanks totaled 73%, and bottled oil - 27%. Traditionally, the export trading of soybean oil was mainly realized in flexitanks, which share in 2016/17 MY increased to 89.06%, as opposed to 60% in the previous season. The shares of sunflower and rapeseed oils totaled 4.5% (5%) and 16.42% (13%) respectively, added the expert.
Also, he noted that to date the exports of Ukrainian sunflower meal in containers demonstrate rather weak but prospective trend, which totals only 2.5% of the general exports. According to P.Mirzak, the situation was mainly related to trade with India, which at the end of 2015 canceled all restrictions related to the imports of sunflower meal, and became the important destination of sales for Ukrainian companies-exporters before large-scale exporters started increasing bulk shipments of the product. As a result, Thailand, Malaysia, Indonesia and Vietnam became the main sales markets for Ukrainian sunflower meal in containers. To date, overloading on the railway transportation system in Ukraine and, as a result of the longer delivery period, overloaded vessels, high freight rates, as well as the cases of goods theft from containers on its way to the seaport, and fraud of freight forwarders, are the key issues in development of the container exports of agricultural products, said the expert.
The second session focused on reports from representatives of the major global consumers of sunflower oil, as well as the main trends and prospects of the global market of vegetable oils in the season-2017/18.
The General Director at Agritel International, Olivier Bouillet, reported about the prospects of Ukrainian sunflower oil on the European market. In 2017/18 MY, Ukraine can increase its supplies of vegetable oils on the European market, mainly due to the expected growth of demand for sunflower oil, said he. According to the expert, in 2017/18 MY rapeseed oil will continue taking the leading positions in the EU industrial sector of vegetable oils - 61%, followed by palm oil (29%), soybean oil (7%) and sunflower oil (3%). At the same time, the increasing level of biofuels and ethanol production in the EU will provide rather high demand for rapeseed oil, therefore the imports of the oilseed by-product to the European Union countries demonstrate a fairly high level. In 2016/17 MY, Ukraine became the largest supplier of rapeseed oil to the EU, and provided 43.7% of the general import volumes. In turn, in the new season sunflower oil will take the largest share of vegetable oils consumption in the food sector - 37%, followed by rapeseed oil - 27%, palm oil - 25%, and soybean oil - 11%, added O.Bouillet.
Also, he reminded that in 2016/17 MY the import volumes of Ukrainian sunflower oil to the EU reached 1.5 mln tonnes, which allowed to the country to become the ultimate leader in shipments of the product, with a share of 92.2% of the general purchased volumes. In the new season, the figures are likely to increase due to changes in the structure of domestic consumption of vegetable oils in European countries. In particular, the market will continue its trend of gradual increasing of demand for palm oil, which started in 2016/17 MY, summed up the speaker.
The Commercial Director at Agroproduct LTD, Sergei Osiychuk, provided detailed information about the Belarusian market of rapeseed oil. The available processing capacities of rapeseed in Belarus provide a significant potential to increase the production of rapeseed oil in the country, To date, Belarus processes its rapeseed volumes at domestic enterprises, which the annual capacities usually exceed 100 thsd tonnes. At the same time, the general capacities of such enterprises is estimated at 530 thsd tonnes per year, while in the current year the real processing volumes will reach 250 thsd tonnes, said the expert.
The similar trend is typical for the enterprises with the annual capacities at 10-80 thsd tonnes, which general potential is estimated at 200 thsd tonnes, in terms of the real processing volumes in 2017 at 140 thsd tonnes. Also, the small enterprises (annual processing at below 2 thsd tonnes) demonstrate the same trend, said S.Osiychuk. In terms of their general potential at 400 thsd tonnes, in 2017 they will actually process 260 thsd tonnes only, the speaker noted.
Also, the third session included reports about the market of soybeans and its by-products. Traditionally, sunflower seed is the major oilseed crop produced in Ukraine. However, during recent years the trend of "soybean boom" started actively developing in the reporting market segment, reported the Head of marketing department at the agricultural holding Astarta-Kyiv, Irina Shadyuk during her presentation. Since 2009, Ukraine became the largest producer of soybeans among the CIS and European countries, and also came to the TOP-10 of the global exporters of the oilseed, she said.
Also, I.Shadyuk added that during 5 recent years, the general planted areas of soybeans in Ukraine increased by 47%, and in the current year its share in the general structure of oilseed crops areas in Ukraine reached 23%. As for trends of the domestic industry of soybean processing, the expert noted that during 5 recent years the domestic processing volumes more than doubled. If in 2005, Ukraine had to import soybean meal and cake to cover nearly 50% of the domestic consumption, then since 2014 Ukraine completely closed the domestic demand and started supplying the products on foreign markets. During recent years, there was observed a clear tendency of advancing growth rates of oilseed processing capacities compared with the growth volumes of soybean production, the expert added.
Also, the Regional director at Danube Soya, Oksana Prosolenko, continued the subject of the Ukrainian soybean market and its prospects on the global market. In 2015/16 MY, the general global production of 10 key oilseeds reached 520 mln tonnes. At the same time, for 10 recent years (from 1997/98 MY to 2015/16 MY) the indicator demonstrated the most dynamical changes for soybeans, rising from 160 mln tonnes to 320 mln tonnes. Soybeans managed to reach such popularity and wide distribution in the global structure of oilseed crops due to a large-scale content of effective nutritional substances, especially protein (34% of the general content), which contributes to its widespread application in production of animal feeding stuff. So, if in 1990/91 MY soybean meal formed 50.7% of the general global production of all oilseed meals, then in 2015/16 MY the figures grew to 65.5%, the expert noted.
Also, she added that GM-varieties of soybeans form only 17% of the current global production of soybeans. While China, India, Russia and the EU-28 are the key countries-producers of the oilseed. Also, the EU countries are one of the main consumers of soybeans and its by-products - soybean meal. But the domestic production of soybean meal covers the demand at 2.5% only. At the same time, the demand for GM-free soybeans, which share in Europe totals nearly 15% of the general demand, is covered by the European production capacities at one third only, added O.Prosolenko. To date, the international non-governmental organization the Danube Soya Association with the headquarters in Vienna, provides the major function of promotion and conveyance of the idea of production, processing and marketing of high-quality GM-free soybeans, as well as quality control of the oilseed originating from the Danube region and other European countries.
Within frames of the conference, the legal partner of the event, InterLegal company, provided a couple of workshops. In the current year, the workshops focused on the role of non-resident companies in the global trade. The Partner at Interlegal, Irina Voyevodina, described all details of this issue - offshore and onshore companies, bank accounts for non-resident companies, tax information exchange and disclosure of beneficiaries, etc. Also, the workshops considered the issue of risk management in seizure of cargoes at the terminals and losses on shipment blocking. The Partner at Interlegal, Artem Skorobogatov, reported on such issues as: problem of illegal blocking of agricultural cargoes in the ports; scenarios: prohibition, seizure, detention; features and troubles in discharge of agricultural cargoes; recommendations for traders and exporters. The interest of conference participants in the workshops confirms the significant relevance of the topics considered by InterLegal.
Closure of a productive session day in a new format "After party" had a stunning success among the conference participants, and we hope it will become a good tradition for many future conferences.
In conclusion, on behalf of the whole team of APK-Inform Agency, I would like to express my sincerest thanks and appreciation to partners and sponsors of the conference for their assistance in organizing and holding of the event.
Anna Platonova, Head of the organizing committee, APK-Inform Agency