The grain season-2018/19 already finished, and it is possible to sum up the certain results. Some reduction of flour production in the country, due to the objective factors, became the main trend of the last season. Unfortunately, these were not the factors arising in terms of improving of the living conditions of the population of the country, and replacing of flour products with more useful ones. The decline of population, as well as decline of exports, were the true reasons. For several recent years, the production of flour demonstrated the following rates:
- 2015/16 MY — 1.986 mln tonnes
- 2016/17 MY — 1.965 mln tonnes
- 2017/18 MY — 1.879 mln tonnes
- 2018/19 MY — 1.671 mln tonnes
In fact, Ukraine produced even more flour volumes, because nearly 30-50% of the production capacities are "in the shadow economy".
In 2018/19 MY, Ukrainian flour exports decreased by almost 30% compared with the season-2017/18. And it is the reality of the current market.
In April 2018, the market faced the rapid decline: 24.9 thsd tonnes, as opposed to 41.3 thsd tonnes in March 2018. And in July 2018, there was a new collapse — 16.8 thsd tonnes. Since November 2018, the situation somewhat improved, and then after the January decline, there was developing a small-scale but steady increasing of the export shipments — to 30.6 thsd tonnes in June 2019.
Such market development was forecasted long ago, even before 2018. First of all, the trend took place, due to orientation to one country, which covered nearly 40% of all foreign shipments — North Korea. Monthly, China supplies nearly 13-19 thsd tonnes of Ukrainian flour to the country. At the same time, Ukraine almost did not develop the prospective African direction.
Russia drew attention to such non-profitable product as flour compared with natural gas and petroleum, and started actively exporting flour to North China. Therefore, the Ukrainian exports of flour started collapsing.
After the sharp decrease in shipments to North Korea, Ukrainian flour millers finally started actively developing new sales markets, in particular the Middle East and Sub-Saharan Africa. Traders started gradually returning the lost positions in Southeast Asia.
For 11 months of the season-2018/19, North Korea remained the main buyer of Ukrainian flour with the share of 17.3%, but in absolute figures it totaled 46.86 thsd tonnes only. But the country continued monthly decreasing its share in the general export structure. In May 2019, the share totaled 4.4% only.
The rating of other countries-importers of Ukrainian flour looks in the following terms: the United Arab Emirates, Palestine, Singapore, Moldova and Israel. The shipments to the UAE demonstrated the most significant results — 14.11% of the export volumes. In May 2019, the UAE imported more than 10 thsd tonnes of the product, while North Korea — 1361 tonnes only.
Also last season, Ukrainian flour millers returned to the markets of Malaysia, the Philippines, Ghana, Myanmar, and even Indonesia, where the company Enlil started realizing the shipments. In addition, Ukraine reached some completely new sales markets: Madagascar, Rwanda, Kenya, Gabon and Togo. The Asian and African markets are the most prospective for the supply of Ukrainian flour. The positive trends in development of the export market allowed to finish the season-2018/19 with the export figures of 301 thsd tonnes.
Despite the global decline in wheat prices, as well as their decline in Ukraine, flour millers managed to increase the average export price of their products from 210 USD/t in July 2018, to 252 USD/t in June 2019. At the same time, for the whole season the market faced some price paradoxes: most exporters sold top-grade flour in bags at the prices of 255-310 USD/t FCA. At the same time, in December-March PJSC State Food and Grain Corporation of Ukraine (SFGCU) sold 76% of the general export volumes of top-grade and 1-grade flour at 230-220 USD/t.
In December-March, most exporters sold top-grade flour at 244-265 USD/t, and 1-grade flour — 234 USD/t.
Since April 2019, the Corporation prices slightly increased, while other exporters increased them in more significant way. For example, in May 2019 SFGCU sold 2018 tonnes of 1-grade flour at 230 USD/t and 3447 tonnes of top-grade flour at 240 USD/t, in terms of the average price of top-grade flour on FCA terms in May at 252 USD/t, and excluding the SFGCU volumes — 257 USD/t.
It should be noted that such low-balling trends appeared in all shipments of SFGCU since December 2018. At the same time, private companies also engaged in predatory pricing: in May 2019 Enlil sold some volumes of top-grade flour at 245-250 USD/t, and Ortash Ukraine — 294 tonnes of top-grade flour at 240 USD/t.
In June, the export volumes of flour again started declining.
Traditionally, ten companies-producers exported more than 80% of the general supplies of Ukrainian flour. The list and rating slightly changed only: Vinnytsia bread factory #2, Roma Commercial Manufacturing Company LLC, Enlil LTD, etc. It should be noted that on the domestic market, the reporting companies also took the top positions in the general list of flour millers. It is worth mentioning the most modern and technological mill of the company Agrodar (the trademark Zernari), which entered the TOP-10 of exporters and solidified in the list, and started actively selling flour on the domestic market. It is quite good result for companies-beginners on the market.
Chairman of the inspection committee of the Union "Millers of Ukraine"
You can become acquainted with more detailed information about the last season results and prospects for Ukrainian companies-processors within frames of the annual specialized conference "Grain Processors Forum - 2019", to be held in Odessa, on October 3-4, 2019.