Soybean imports to Ukraine: reasons and consequences




This year, Ukrainian soybean market faced an unusual situation that raised many discussions among market participants. Strong export of soybean in 2019/20 MY caused the deficit of the feedstock on the domestic market and raised the necessity to import the oilseed.

How sis the market operate under such conditions? What were the main challenges and risks? Is the soybean imports perspective and wheat about soybean amendments? And what are the expectations for 2020/21 MY?

To hunt down a question, APK-Inform carried out the polling of the leading companies operating on Ukrainian soybean market.

Most of the respondents did not wish to be identified, thus we provide a series of the most interesting comments and reveal the results of the survey.

First of all, we would like to show our statistical data regarding soybean stocks in Ukraine.

Since the second half of 2019/20 MY, Ukrainian soybean market has been functioning under the conditions of limited supply while the export pace remained impressive. In late May, the deficit of soybean turned to be the most discussed issue. The market activity declined significantly. Many enterprises used the quarantine period to handle the plan maintenance work. The second wave of shutdowns was observed in summer period amid feedstock deficit.

We have asked what were the soybean supply and stocks volumes on the market before the arrival of the new crop?

  • Stocks will be enough until the new crop – 20%
  • Deficit – 67%
  • No answer – 13%

Have the margin of soybean processing changed in March-May amid the crisis caused by the pandemic and quarantine?

  • Remained unchanged – 60%
  • Decreased – 33%
  • Increased – 7%

Do you buy new-crop soybean forward?

  • Yes – 0%
  • No – 100%

What do you think about competition for soybean in the new season amid the cancellation of amendments and uncertainties with coming crop?

  • It will grow – 47%
  • It will remain unchanged – 40%
  • No answer – 13%

Do you consider soybean import to Ukraine promising?

  • Yes – 8%
  • No – 61%
  • No answer – 31%

How will the demand for soybean products change on inner and export markets in the new season?

  • It will grow – 25%
  • It will decline – 8%
  • It will remain unchanged – 67%

“Our enterprise is small. We need only 800 tonnes of soybean per month. Thus, we do not have big concerns regarding the lack of feedstock before the arrival of the new crop. The margin of soybean processing declined at the time of quarantine restrictions. Many processing plants were shutdown in summer as usually due to the decline of demand amid the end of “mix-feed season”. It is difficult for us to compete on the market of soybean products. High-protein concentrates come to the market and pressure the demand for cake. I suppose that will force our enterprise to close rather soon”, one processor from Cherkassy oblast shared his opinion.

Farmers have soybean stocks that are sufficient until the new crop. We have not shut down our enterprise during the pandemic and quarantine. So, our margin was stable. I suppose the competition on the soybean market will remain tough. Nevertheless, to import soybean is nonsense. To my mind, it has no advantages. Companies who imported soybean said its quality was lower compared to Ukrainian oilseed”, – one exporter from Ternopil oblast commented.

“Many enterprises shut down during the quarantine, however, the main reason was soybean deficit. We will see the high competition next season not so much on the elimination of soybean amendments as on decline of planted area this year that could be as high as 30%. Only large holdings will be able to import soybean, thus, I do not consider it promising. The demand for soybean products will remain rather stable as in recent seasons”, – one processor from Kiev oblast with his own land bank declared.

«Currently, a number of soybean offers is very low on the market, thus, the prices are so high. The pandemic affected the soybean processing margin mainly in places where the outbreaks were observed as plants were forced to shut down and the disruption of supplies occurred. I could not say it influenced on prices. In the new season, competition and prices will mainly depend on crop size. I talked to farmers in many regions. Some of them expect lower yield, while others suppose it to stay at the last year level. Nevertheless, I think soybean import will make sense only for large enterprises in case of feedstock deficit. The demand for soybean products will not decline in 2020/21 MY. Moreover, the demand from exporters should increase as more and more companies are interested in export of soybean products”, – one processor from Kirovograd oblast said.

“I suppose, soybean stocks to be insufficient until the end of the season as farmers narrowed the planted area in 2019. Yes, there were some volumes imported, however, it is a question whether processor will import additional volumes until the start of the new season. The lack of soybean caused the second wave of shutdowns of processing plants. Usually, only large processors continue working in the summer period, while small ones postpone their activity as soybean prices are too high for them. I suppose that soybean import will grow due to the traditionally high competition on the domestic market. Soybean production should be high in 2020/21 MY as the amount of precipitation and number of sunny days were favorable for crop development. The demand for soybean and its products is growing every year. Now, even small livestock farms use soybean meal and cake in feed ration. The demand for products will grow further, that is why the number of processing enterprises increases”, – one representative of processing industry from Dnipropetrovsk oblast commented.

“Carry-over stocks of soybean are the lowest over the last 10 years in Ukraine. I do not see any prospects of processing of imported soybean. We need to increase its production. I do not think the competition between processors will reach critical level. It depends on different factors during every season, however, I cannot say it changed notably. As to the competition on the market of soybean products, it will depend mainly on performance of processing giants. The activity of small enterprises does not have real influence. If the planned processing plant would be launched in Sumy oblast, the competition will be higher”, another processor from Dnipropetrovsk oblast shared his opinion.

“According to analysts, the stocks of soybeans in the market at the beginning of July totaled around 100 thsd tonnes, however I disagree with this figure. Whether this volume is going to be enough until the new harvest depends on the rates of oilseed processing. Lately soybean export is extremely low because it is difficult to form the export batches. In a summer period many oil extraction plants halt the operations for scheduled maintenance works, thus the export of soybean by-products is going to be low. Speaking of soybean import, it is going to pressure the prices on the domestic market. What can be the advantages? All the imported soybeans are non-GM. Most of the processors do not pay attention whether soybeans are GM or not, and only some crush only non-GM oilseed. The import from Brazil and Argentina can be rational if these countries have high crop, and in Ukraine, for example, the production declines because of either areas or yield decrease due to unfavorable weather conditions. I do not exclude the possibility of areas decline because currently many farmers refuse to grow soybeans, referring to the high production costs and concerns of low production profitability. Meanwhile, the competition between the traders and processors will remain high, moreover taking into account the accumulation of production capacities”, – said a representative of export-oriented company in Zaporizhzhya oblast.

Only two respondents have kindly agreed to give us formal comments on the following questions:

  1. How do you estimate the supply and stocks of soybeans on the market until the new crop?
  2. How do you estimate the export activity of soybeans and by-products in a summer period? What are the main obstacles?
  3. During the quarantine, many enterprises have stopped for scheduled maintenance work. At the same time, there was a second wave of stops in a summer period. What is the reason?
  4. How promising is the import of soybeans for processing in Ukraine? What are the pros for processors and what can be the risks?
  5. Has the marginality of soybean processing changed in March-May because crisis caused by the pandemic and quarantine? If it has, how much?
  6. Have you carried out the forward purchases of new-crop soybeans? If you have, what features could you note compared to previous seasons?
  7. How do you estimate the competition for soybeans in a future season in terms of the cancelation of the soybean amendments and uncertainty with harvest 2020?
  8. What are your expectations of changes in demand on soybean by-products in 2020/21 MY on both domestic and export markets?


  1. I believe that the stocks of soybeans until the new harvest are very low. There has been a high shortage of the oilseed on the market for a long time and there is a situational import of soybeans.


  1. During this period the main limiting factors for the export are the physical existence (or rather absence of volumes) and the domestic prices for soybeans and by-products, which are currently higher than the global, because of the deficit of soybeans on the Ukrainian market.


  1. I believe that the partial filling or total halt is possible for those enterprises, which can process only one type of the product (soybeans for example). The situation is simpler for those companies, which can readjust the machines for the processing of other crops (rapeseed for example).


  1. Ukraine is a net exporter of soybeans. At the same time, in the end of the season and before the new crop there can be conditions favoring the import of soybeans. This is especially true in terms of the cancelation of so-called “soybean amendments”, which activates already high export of soybeans from Ukraine. However, stable and high quality of imported soybeans is an advantage of the potential import of the oilseed, at the same time the disadvantages can include the costs connected with the VAT payment and logistical expenditures, which as a result increases the final cost to the level of the domestic prices for soybeans. You also need to keep in mind the ban on import of GM soybean to Ukraine: the prices for non-GM soybeans usually make the import unnecessary. I believe the constant changes of market situation to be one of the notable risks. During the delivery of the bought soybeans abroad the prices for by-product often change and not always in a beneficial way for the processor.


  1. The global COVID-19 pandemic and quarantine have brought unsteadiness on the market of soybeans and by-products, caused currency fluctuations and led to the drastic price changes on global and domestic markets. On one hand, on the domestic market the pandemic led to the decrease of soybean supplies and by-products respectively, which led to price rise. On the other hand, the export of by-products is now more complicated because many countries have notably reduced the consumption. As a result, it is difficult to count on the high marginality of soybeans processing.


  1. The forward prices for soybeans in seaports in the beginning of July amounted to 340 USD/t, which was considerably lower than producers expected even including VAT refund. Thus, there was a low forwarding activity on the market.


  1. In the current season, we can see the increase of planting areas under soybeans, but the bigger production is questionable because of possible unfavorable weather conditions. In Ukraine, processors and trader exporters keep on competing for soybeans and it only intensifies due to the constant increase of processing capacities and cancelation of soybean amendments.


  1. If we speak about the domestic market, the main consumers are rather unchanged, thus I don’t expect the structure of demand to change. On the global markets, the situation depends extremely on price, and respectively the possibility to compete with the main suppliers of the same products.

  1. I estimate the stocks of soybeans to be around 30-40 thsd tonnes. It is considerably lower than last season.
  2. In the coming months up to 5 thsd tonnes of non-GM and 5 thsd tonnes of soybean meal will be delivered. Herewith, the buyers demonstrate high interest in the purchases of soybean on the global market only and are ready to buy it at high prices. At the same time, the export of soybean meal is conducted rather because of “no way out” as the production volumes are higher than domestic consumption.
  3. There already was a deficit of soybeans during the first wave of the halts, which became the main reason for halts. The second wave was caused by seasonal factor and in particular, by the necessity of many enterprises in scheduled maintenance works.
  4. I don’t see any prospects of soybean import. The only exception can be a situational import of small volumes of the oilseeds in a view of the deficit, as in a current season, for example, when the active export led to the deficit of the oilseed and high competition between the processors.
  5. Immediately after the start of the pandemic, there was a decrease in demand for meat products and fuel, which, in a chain reaction, affected the demand for soybean oil and meal. This situation based on the high prices for soybeans clearly negatively impacted the marginality of processing.
  6. On the domestic market the soybeans forward trade is not common.
  7. In terms of the competition for the oilseed, the cancelation of soybean amendments is not critical. The level of competition has been and will remain high because the planted areas under the crop declined slightly whereas the forecasts of the yield are similar to last year.
  8. The domestic market capacity is not high, thus soybeans and by-products will remain rather export-oriented type of products.

In general, there is something to think about, and, as often happens, there are more questions than answers. Nevertheless, the start of a new season is close and soon we will find out exactly how the work of this segment will develop and whether the market participants will learn the hard way of the business strategy and the positioning of Ukraine as a key global market player.

Time will show…

For now, we wish you a successful oilseed season!

 Anna Tanskaya, Alina Timofeeva