Flour market of Ukraine: stable reduction, or increase of the "shadow" market?

Source

APK-Inform

2575

In the first quarter of the new marketing year, Ukraine produced nearly 396.1 thsd tonnes of wheat flour. The figures became slightly lower compared with the volumes in the season-2018/19 (407.9 thsd tonnes), and 2017/18 MY (494.4 thsd tonnes).

 

 

The market demonstrated the stable decline in production or, most likely, the clear increase of the "shadow" market. As a comparison, Germany produces nearly 6 mln tonnes of wheat and rye flours annually, with the population of nearly 83 mln people. In Poland, the annual production of flour totals nearly 2.75 mln tonnes, with the population of 38.6 mln people. In other words, the annual consumption totals nearly 70-72 kg of flour per capita. I do not think that Ukraine consumes less flour per person than Germany and Poland do.

If the population of Ukraine totals 42 mln people, then the actual annual production totals more than 3 mln tonnes of flour.

According to the official statistics, 10 enterprises produce more than 40% of Ukrainian flour. The major players are rather constant, as well as their rating. Nearly 2-3 of variable members of the list usually somewhat rotate. In any case, there are no more than 15 participants in the rating. But the statistics do not cover TH Zernari, as well as the rating. Although, their production volumes should move the company to one of the first positions of the rating.

 

Company name

Flour production in July-September, tonnes

2019

2018

2017

1

Vinnytsia bread factory #2

44 400

27 387

40 171

2

Dnipromlyn LLC

26 696

25 478

30 222

3

Stolichny mlyn LLC

23 933

22 973

28 803

4

Roma Commercial Manufacturing Company LLC

19 329

19 609

19 563

5

Chmielnicki Mlyn LLC

15 749

15 137

20 874

6

Krolevets Bakery Integrated Plant

15 434

11 243

26 677

7

Enlil LTD

13 713

8 002

8390

8

CJSC Vasylkiv Khlebproduct

10 097

20 847

****

9

Novopokrovka Factory of Bakery Products

9 381

19 643

28 750

10

PRAT Rivne-Boroshno

8 164

7 558

6 203

TOTAL in Ukraine

396 146

407 956

494 452

TOTAL production by the TOP-10

186 896

177 877

209 653

% of the general production

47,2%

43,7%

42,4%

 

In terms of the constant decline in production (according to the official statistics), the export shipments of flour somewhat increased, but only in comparison with the first quarter of 2018/19 MY.

 

 

For 3 months of 2019/20 MY, the export volumes totaled 79.4 thsd tonnes, which is significantly more than 47.5 thsd tonnes shipped during the same period of the season-2018/19, but significantly less compared with 94.7 thsd tonnes in the last quarter of 2018/19 MY. Some growth of the shipment volumes in September and early October carries hope of achieving at least the last year figures.

While comparing the prices with the same period last season, then there is observed some downward trend. The prices moved close to the figures of 2017/18 MY. For comparison, the diagram used the prices of large-scale companies-exporters of top-grade flour in bags in FCA terms.

 

 

JSC State Food and Grain Corporation of Ukraine (SFGCU) stopped its months-long dumping trend, and started trading at the real market prices.

 

 

It is a special satisfaction that the positive changes in the geography of Ukrainian exports, which actively developed last year, also remained in the current year. The African destination of flour supplies somewhat increased. Taking into account the Middle East, the reporting destination takes more than half of all Ukrainian flour shipments. At the same time, the shipments to North Korea somewhat stabilized, and did not exceed 4 thsd tonnes per month.

 

 

Also, the shipments to the United Arab Emirates stabilized, and the monthly volumes reached nearly 5-10 thsd tonnes. It is clear that the country does not consume the whole reporting volumes. But the UAE provides the large-scale transit of Ukrainian flour to other countries. The supplies are realized from the UAE granaries, as well as in the documented way, when the product is immediately sailed to the specified destination.

 

 

According to the statistics, the UAE overtook the previous positions of North Korea, and became the uncontested leader among buyers of Ukrainian flour.

In July-September period, the number of countries-recipients of flour totaled 26. In particular, in September 2019 the list decreased to 19, although the export volumes increased.

The list of major companies-exporters somewhat changed. SFGCU on its last legs kept the first position, but it is a matter of time. In the immediate future, the status quo will restore, and Vinnytsia bread factory #2 will rightfully return to the top of the rating.

 

 

For 3 months, 10 enterprises exported 72.86 thsd tonnes of flour, or 91% of the general export volumes from the country. For the same period last season, the TOP-10 exported 46.14 thsd tonnes, which also formed 92.6% of all shipments. Generally, in the reporting period 26 enterprises exported flour products.

The results of the first quarter of 2019/20 MY demonstrated the increased export volumes compared with the results of the first quarter last season. But we still have a long way towards the results of 2017/18 MY.

 

Serhiy Sakirkin, Chairman of the auditing committee at the Union "Millers of Ukraine"

 

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