Ukrainian Grain Market
AGRO PERSPECTIVE «Ukrainian Grain & Oilseed Market » January 25-31, 20008 # 54 (157)
Changes occurred on global finances, gold, petroleum and food markets (namely collapse of main goods groups prices) haven’t significantly affected Ukrainian grains market within this week.
Unlike expected, Ukrainian domestic sector started following growth trend. Most grains producers who had food wheat big reserves were hoarding them up in order to start selling only since late spring (when sale prices are traditionally up). As for export market conjuncture, it is to be admitted companies had submitted food wheat licenses/quota shares applications still before global economy started weakening and therefore corresponding wheat contracts prices remained rather high within this week. That’s why no Ukrainian grains export prices changes will be able to significantly influence country wheat market at least until Apr: wheat shipments will be performed only at prices earlier declared by traders (i.e. prices fixed within end Dec 2007-early Jan 2008).
Within this week feed wheat prices were up once again, — though offer prices boosted higher against demand prices. Due to offer/demand prices very big difference, number of real trade operations appeared to be very small. Besides, this week feed wheat market conjuncture was directly influenced by State authorities declarations (though made unofficially) about Apr 1/08-Jun 1/08 grains export quotas possible raising. That’s why agricultural producers are determined to limit their grains reserves sales until Apr 1/08-Jun 1/08 in order to receive maximal profits.
Feed barley also followed market tendencies. However, barley prices growth was lowest among other main grain crops, mostly due to earlier fixed very high prices and poor prospects for export over established quota (it is to be admitted, 2007 Ukrainian total grains crop decline was caused mainly with barley crop fall, what made Government unwilling to risk in permitting barley export due to tough domestic balance).
In fact, 2006/07 MY barley export equaled to 5.15 mn MT, — but it was backed up by record high butter crop (11.34 mn MT) with 6.19 mn MT remained to be used for domestic consumption, transitional remainders and spring sowing campaign (11.34 mn MT — 5.15 mn MT = 6.19 mn MT). Experts affirm 6.1–6.3 mn MT barley crop received in current 2007/08 MY won’t permit Ukraine to export over 0.5–0.7 mn MT. However, in what concerns barley export, last word is to be said by Government.
Feed maize market continued strengthening, due to at least 2 reasons: traders (spirit and mixed feeds plants) demand growth as well as other grain crops (wheat, oats, rye, barley) markets being dominated by positive prices trend.
EXPORT
Feed barley purchase prices remained UAH1,210–1,280 per MT (EXW-ex-elevator, depending on regions/companies). If barley export were free, feed barley US$ purchase prices would range within US$320–330 per MT (FOB)/US$310–320 per MT (CPT port).
Feed wheat prices have much grown, — up to UAH1,130–1,200 per MT (EXW-ex-elevator).
Feed wheat ports US$ purchase prices were just declarative, ranging within US$290–300 per MT (CPT port).
FOB offer prices fluctuated within US$300–310 per MT (FOB).
4 class food wheat US$ prices could (taking into account global market prices current conjuncture) equal to US$330–340 per MT (CPT port).
Maize
Traders purchased feed maize at UAH1,130–1,190 per MT (EXW-ex-elevator). Feed maize US$ prices were " US$270–280 per MT (CPT port)/US$280–290 (FOB).
As of now, all processors are divided into 2 groups: first ones don’t respond to agricultural producers sale prices growth and continue retaining purchase prices unchanged as of previous, while others are actively searching for grains, but find only «unbelievable» (as they say) prices, — UAH1,550–1,600 per MT (3 class wheat, CPT plant), — what makes them raise purchase prices in order to somewhat replenish exhausted resources.
Evidently, this market situation has appeared due to Government decisions on grains export market as well as agrarians good financial condition (enabling them to dictate their own market rules and take most advantageous market positions). Unlike last few years, when it was much problematic to hoard up grains until MY end (what was possible only for big agricultural producers) as it was necessary to replenish circulating assets, now most producers can store grains until time when most advantageous conditions are formed on market.
Thus, due to abovementioned reasons, Ukrainian/global grains prices difference has much narrowed.
Besides, last 2 years grain crops feed consumption growth have become additional factor to support grains market. As to Ukrainian Ministry of Statistics data, country 2004 mixed feeds output totaled 1.86 mn MT (2005 — 2.38 mn MT due to very high 2004 grains crop, 2006 — 3.13 mn MT, 2007 — 3.42 mn MT). As to Ministry, within these years poultry/pigs number has been significantly growing even despite cattle number decline.
Processed Products
Processors say within this week flour demand has been gradually approaching its rates reached before New Year holidays beginning. However, part flour millers (mainly in western/eastern regions) found it much problematic to sell 1 grade flour as this kind flour had been supplied to country bakeries by State Committee for Material Reserves (State Reserve) at preferential prices. Practically all flour milling integrated plants retained flour sale prices unchanged as of previous; prices were raised only by a few plants.
Within this week bakers continued appealing for all flour market participants actions coordination in order to stabilize country social kinds bread/bakery products prices and prevent their further growth. It is to be reminded, within last few months bread/fancy bakery products sale prices were up practically in all regions. Some bakeries chiefs affirmed this prices growth was economically justified due to flour cost boost; in response, Government directed additional flour lots from State Reserve to most problematic regions (i.e. Dnipropetrivsk and Kirovograd regions).
It is to be admitted, bran demand/prices remained stably high within this week, — mainly due to bran export rates growth (thus, 2007 bran export totaled ≈ 264,000 MT, up 54,000 against 2006) and mixed feeds producers stably high demand.
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