Withstanding of processors and exporters on the Ukrainian market of rapeseed
The beginning of 2018/19 MY for Ukrainian market of rapeseed was marked by the breaking start and active harvesting campaign and also the new records. The sub-total results of the oilseed production exceeded the results of the previous year by 21%, which became the spur to increase the exports of both oilseed and its by-products.
The expectations of market participants towards the growth of rapeseed production were more than justified, due to the favourable weather conditions during the planting campaign and the overwintering period of the seeds that led to the smallest level of crops losses (nearly 4%). According to APK-Inform figures, in the current season Ukrainian agrarians harvested 2.7 mln tonnes of rapeseed, against 2.3 mln tonnes in 2017/18 MY, which became the largest volumes for 10 recent years, and the second largest in history (2008/09 MY, the record harvest reached 2.8 mln tonnes).
The reasons for widening of the areas under rapeseed in 2018/19 MY were the high interest of European buyers to the purchase the oilseed, and the most attractive prices for other oilseeds, according to agricultural producers. Also, the desire of farmers to sell as much rapeseed as possible, before the law on cancelation of the VAT refund for exports becoming valid starting January 1st of 2020 played its important role for the increase of the planted areas. Thus, the planted and harvested areas reached 1.1 and 1 mln ha respectively, up 14% and 25% year-on-year.
On the halfway to enhancing of the export positions
The volumes of rapeseed exported from Ukraine ending FH of 2018/19 MY (July-December) totaled nearly 2.3 mln tonnes which surpasses the y-o-y volumes by nearly 0.3 mln tonnes. The increase of export was explained by the high demand and was realized by means of widening of the geography of export.
This season Ukraine has mastered the new market of distribution, in particular Mexico, Cyprus, Romania and Moldova and the total volume of the rapeseed consumption by these countries reached nearly 44 thsd tonnes. It should be noted that after the long break in purchase of oilseed India and Malaysia renewed the import of the product but at the same time the volumes of the consignments in July-December of the current season declined in 96 and 65 times accordingly compared the previous season.
Generally, for 6 recent months of 2018/19 MY Ukraine exported rapeseed to 25 countries. In particular, the EU countries purchased more than 2 mln tonnes of the oilseed. The largest volumes of rapeseed were imported by Belgium (up 63%), Germany (up 51%), France (up nearly 3 times), and the Netherlands (down 73%). Also, the Middle East countries and South Asian countries were interested in purchase of the Ukrainian oilseed.
As of beginning of February of 2019, the main share of the crop was already exported. Due to the high demand and attractive prices on the export market, for the first 6 months of 2018/19 MY the volumes of deliveries reached the highest levels, which became the main feature of the season.
High price start
After the law on the VAT refund cancellation was postponed in March 2018, Ukrainian traders started to conclude forward contracts for the delivery of the new crop oilseed. The reserved bid prices for oilseed were significantly higher y-o-y (by approximately 45 USD/t) and usually reached 420-425 USD/t CPT (with delivery in August-September). However, in terms of the information about the increase of production of rapeseed in Ukraine and the EU, in the beginning of April the prices were declining. The trend developed until mid-July, due to the high stocks of the oilseed on the European market and expectations of the increase of offers on the Ukrainian market as the harvesting campaign started.
As soon as the first consignments of oilseed were traded by the end of July, the prices formed mostly in the upward trend. During 6 months of the current season, the prices reached their peak in August that stimulated agrarians to sell off intensively. As a consequence, the export volumes reached the record numbers. The high interest of the importers to the purchase of Ukrainian rapeseed, at a time when the rapeseed production in France and Germany declined, led to the price increase at the beginning of the season. Some support for the prices was given by the delay of the yield figures of the Ukrainian rapeseed compared to previous season.
Traditionally, by October the stocks of the oilseed were almost totally crushed or sold for exports, thus the offer prices stayed on the same level by the end of November.
During December, the declarative prices declined pressured by the same tendency on the global market of oilseed and the low trading activity owing to the seasonal supply deficit.
Crush increase in focus
Together with the growth of the production of the oilseeds this season in Ukraine, the crushing volumes of rapeseed accelerated as well. The main reason was a deficit of the sunflower seeds supply during the intercrop period.
In general for the last 6 months of 2018/19 MY the multi-crop enterprises bought and processed nearly 302 thsd tonnes of rapeseed, which is 90% of the forecast, and almost 2.3 times higher compared to previous year.
Once again the interest to the processing of oilseed was demonstrated by such companies, as GradOlia, Zakhid-Agroinvest, Oliyar, Vinnytsa Fat and Oil complex, Chernovytskyi FOC, Nezhyn Fat Complex and others. The new market players were Oilseeds Black Sea, Delta Vilmar CIS, Dniprooliya and Oliyniy Dim.
The beginning of 2018/19 MY for the export market of the products of rapeseed processing was marked by the very attractive price conjuncture, herewith the enterprises on the north and west of the country showed the high delivery activity because they have bought the product in July-August when the number of offers was minimal.
In the FH of 2018/19 MY (July-December), the general production of rapeseed oil in Ukraine reached 146 thsd tonnes. Together with the growth of the production the export also increased. Thus, the exporters delivered nearly 143 thsd tonnes of the product on the global market, against 58 thsd tonnes in the same period last season.
The products were delivered to 20 countries. China (up 8 times), Poland (up 44%), the Netherlands (up 100%), France (up 100%) and Lithuania (down 39%) still were the main importers. We should note that in the FH of 2017/18 MY, the Netherlands did not occupy the leading positions.
Also, the exports of rapeseed meal/cake reached the record volumes since the beginning of the season. The maximum volumes of the shipments were fixed nearly every month. The EU (116 thsd tonnes) and the Middle East countries (17 thsd tonnes) still were the main importing regions.
Conclusions and prospects
Ukrainian agrarians did not scale back and continued increasing the planted areas for the future crop up to 1,3 mln ha — the highest for the last 9 years, influenced by the above mentioned factors, and the IGC forecasts on rapeseed production declining in the EU from 6,6 mln tonnes to 5.8 mln tonnes in 2019/20 MY. The annual surplus of the areas can be seen in nearly every oblast of Ukraine, but the biggest growth was fixed in Kherson oblast (up 45%), Odessa oblast (up 36%) and Dnipropetrovsk oblast (up 33).
If we speak about the prospects for the future season, then there is a possibility of production growth owing to the widening of the planted areas. Herewith, the main factors that would specify the further development and condition of the crop should be the weather conditions during the vegetation period. Also, taking into account the law on VAT refund cancellation on rapeseed export entry into force starting January 1 of 2020, the majority of traders would continue to increase the volumes of oilseed shipment to the global market. In case of the favourable price conjuncture on the global market, the volumes of rapeseed by-products in Ukraine can increase.
Tatiana Khromenko, oilseed market expert, APK-Inform Agency
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