Rapeseed market of Ukraine — on the threshold of 10-year peak

APK-Inform

In 2017/18 MY, the market of rapeseed in Ukraine faced the recovery of the production and trading volumes after three running seasons of the continuous recession and reaching their minimum level for the recent decade in 2016/17 MY. Such situation allowed to Ukraine to become a net exporter of rapeseed and improve its share in the global trade from 6.5% to 13%. The country closed the TOP-3 of largest countries-suppliers of the oilseed on the global market after Canada and Australia. In the new season, Ukraine has good prospects to strengthen its share at the expense of the maximum harvest volumes of rapeseed for the recent decade.

The growth of rapeseed planted areas for the harvest-2017/18 by 36% compared with the previous season, and the harvested areas — up 76% (due to the relatively good overwintering process of winter rapeseed), in combination with the record high yield figures, allowed to Ukrainian agrarians to almost double the harvest volumes, and produce 2.3 mln tonnes of the oilseed (hereinafter — the estimations of APK-Inform Agency). By the way, for 9 recent years it was the "ceiling" of production, and the situation almost repeated the figures of 2013/14 MY: the similar growth after the minimum volumes of 1.2 mln tonnes in the previous season.

 

 

In terms of the positive wave of the high sales prices of rapeseed (which were the highest ones among all oilseed crops) and good profitability figures (the maximum ones all among the major agricultural crops), agrarians increased the planted areas for the harvest-2018/19 by 14%, to 1.1 mln ha. The favourable overwintering period contributed to the minimum losses of winter rapeseed in the whole contemporary history of the oilseed cultivation in the country, which totaled less than 4% according to preliminary estimations (the April estimations totaled nearly 10%). Thus, the harvested area increased by 25%. The upward trend in the areas developed in all oblasts of Ukraine, except for Ivano-Frankivsk and Kharkiv oblasts.

Despite some reduction of the yield figures in the current year by 9% against the last year record level, the indices will generally meet the previous year results. Thus, to date APK-Inform Agency estimated rapeseed production in the current year at 2.6 mln tonnes (up 14%), while agrarians almost completed the harvesting campaign of the oilseed. It is the maximum result for the recent decade, and the second largest harvest after the record level in 2008/09 MY (2.8 mln tonnes).

Despite the constant increase of supply, in July-October last season the bid prices of rapeseed increased from 11`000 UAH/t to 13`000 UAH/t EXW (up 18%) and varied at that level until February 2018. In July-September, i.e. before fixing of the maximum prices, Ukraine managed to export 1.34 mln tonnes of rapeseed, or 63% of the general volumes. In the reporting period of year, it became the highest export volumes in the whole history of rapeseed trading. Also, in terms of having private storage capacities, the contracts which entered into from in October-February (35% of the general shipments), reached the maximum profitability rates.

In 2017/18 MY, the high demand on foreign markets, rising soybean prices, UAH devaluation rates, and the rise of petroleum prices to the highest level for 3 recent years, became the main impact factors of price development on the Ukrainian market of rapeseed.

 

In 2017/18 MY, the export volumes of rapeseed reached 2.12 mln tonnes, up more than 2 times compared with the previous season. In addition, the reporting export volumes became the maximum ones for 4 recent seasons.

Ukraine supplied rapeseed to 25 countries, against 23 in the previous season. Traditionally, the EU countries became the main importer, which covered 81% of the general shipments, against 92% in 2016/17 MY. At the same time, Ukraine increased the share of supplies to other regions: South Asia — from 3% to 12%, the Middle East — from 4.5% to 6%.

In physical terms, Ukraine supplied 1.72 mln tonnes of the oilseed to the EU (up 80% compared with the previous season). The Netherlands (up 4.3 times), Germany (up 3.2 times), Belgium (up 2.1 times), France (down 40%), Portugal (down 3%), and Poland (down 3 times) were the main countries-importers.

The region of South Asia took the second position, and which supplies reached 260 thsd tonnes (up more than 8 times). Pakistan (no trade in 2016/17 MY), Bangladesh (up 2.8 times) and Nepal (down 22%) were the main countries-importers in the region. Also, Ukraine supplied rapeseed to India, while in the previous season the country did not purchase rapeseed from Ukraine.

The Middle East countries imported 126 thsd tonnes of rapeseed (up 2.7 times). Last season, Ukraine resumed rapeseed supplies to the United Arab Emirates — 52.5 thsd tonnes. Israel imported 45.7 thsd tonnes of the oilseed (up 50%), and Iran — 27.6 thsd tonnes (up 88%).

The supplies to countries of Southeast Asia totaled 12 thsd tonnes (up 21 times). In particular, Vietnam purchased over 10 thsd tonnes, against 0.5 thsd tonnes in the previous season. Also, Ukraine recovered the supplies to Malaysia and Indonesia.

 

 

Last season, Ukraine increased the number of companies selling rapeseed. At the same time, ADM Trading Ukraine LLC kept the leadership position, and increased the exports by 55%. Glencore Grain Ukraine significantly increased the foreign shipment volumes, and moved from the 15th to 2nd position. Cargill, Nibulon LLC and Mironivsky Hliboproduct took the following three positions in the rating — they were located in the same order as in the previous year, and also significantly increasing the sales volumes (up 2-2.5 times). The general share of the TOP-5 of companies-exporters covered almost half of the general exports of rapeseed from Ukraine in 2017/18 MY.

 

Ratings of companies-exporters of rapeseed from Ukraine

2016/17 MY (July-June)

2017/18 MY (July-June)

Company

Share

Company

Share

1

ADM Trading Ukraine LLC

26,3%

1

ADM Trading Ukraine LLC

19,9%

2

Cargill

7,8%

2

Glencore Grain Ukraine

8,6%

3

Nibulon LLC

5,5%

3

Cargill

7,8%

4

Mironivsky Hliboproduct

4,8%

4

Nibulon LLC

6,7%

5

Company Melagrain LLC

4,3%

5

Mironivsky Hliboproduct

4,3%

6

Vilia-Trade LLC

3,9%

6

SunTrade Subsidiary Company

2,5%

7

Agro LV

2,8%

7

COFCO Agri Resources Ukraine

2,0%

8

Agroprosperis Trade

2,4%

8

LLC Volyn-Zerno-Product

1,8%

9

Seedrail

1,8%

9

Jurate-S

1,6%

10

Mriya Trading LLC

1,5%

10

Kernel Trade LLC

1,4%

 

Others

39%

 

Others

43%

 

TOTAL, mln tonnes

1,03

 

TOTAL, mln tonnes

2,12

 

As for the exports of organic rapeseed, in the season-2017/18 Ukraine also demonstrated an upward tendency, although in physical terms the volumes are not comparable with the shipments of traditional rapeseed. According to APK-Inform estimations, the export volumes significantly increased — up 40% compared with the previous season, and totaled nearly 6 thsd tonnes.

Last season, 5 companies only exported Ukrainian organic rapeseed. Traders kept the first 3 positions in the rating: Barbet (Kherson oblast) shipped 41% of the general volumes, BioCore Ukraine (Zhytomyr oblast) — 28%, and Sadeko Organic Ltd. (Kherson oblast) — 18%. Also, two connected companies from Rivne oblast took the remaining positions in the rating with the general share of 13% — the producer Ritter Bio Agro LLC and the company-exporter of its products RSN-Trade.

For three recent seasons, Ukraine exported organic rapeseed to EU countries only, mainly to Germany (44% of the supplies in 2017/18 MY), Belgium (28%) and Austria (18%).

Ukraine exports the whole produced volumes of rapeseed — mainly in the form of oilseed raw material (nearly 80-90% of the harvest), but also in the form of various by-products. Despite the growth in the supply of the raw material in the reporting season by 85%, its domestic processing did not increase, but even decreased by 12%, and reached nearly 140 thsd tonnes.

The figure became the minimum one for 5 recent seasons, although the potential of rapeseed processing is quite high, taking into account almost double increase in the supply volumes. The situation developed, because rapeseed in the form of raw material is in high demand from the EU countries, which prefer loading their processing capacities with the oilseed and work with more financially attractive Ukrainian raw materials. The trend supports the export prices, which in turn affects the domestic prices in Ukraine, and becomes unacceptably high for many domestic processors, due to reduction of the processing margins.

Therefore, last season only a dozen of companies managed to work in the sector of rapeseed processing. Oliyar (43% of the general processing volumes), PJSC Vinnitsa oil seed crushing factory (24%), Gradoliya (9%), ADM Illichivsk (7%), and Zapad-AgroInvest (4%) were the major players in the reporting market segment.

 

 

In the season-2018/19, the exports of rapeseed have the potential of increasing by 12% compared with the previous season — to 2.38 mln tonnes, due to growing of the harvest volumes, and diversification of the sales markets.

At the same time, the domestic processing will grow to 180 thsd tonnes (up 28%). Many large-scale enterprises already informed about moving from processing of sunflower seed towards working with rapeseed in the current season, including Allseeds Black Sea, Gradoliya, Bessarabia-V, Delta Wilmar CIS, Oliyar, Vinnytsia complex, Nizhynsky fat-and-oil complex, Oliyniy Dim, DniproOliya, etc. Generally, the current Ukrainian capacities allow processing all rapeseed volumes grown in the country without any reduction of the rates for other oilseeds.

In 2018/19 MY, the exports of rapeseed by-products will exceed the previous season results by 28%. In particular, the potential of rapeseed oil shipments totals 77 thsd tonnes, and rapeseed meal/cake — 90 thsd tonnes. In 2017/18 MY, Poland, Spain, Lithuania, China, Latvia, and Malaysia were the main importers of rapeseed oil; Lithuania, Poland, Israel, Latvia, Portugal and others — rapeseed cake and meal.

 

Supply and demand balances of rapeseed and by-products in Ukraine, `000 tonnes

 

Rapeseed

Rapeseed oil

Rapeseed meal/cake

16/17

17/18

18/19
forecast

16/17

17/18

18/19
forecast

16/17

17/18

18/19
forecast

Beginning stocks

63,1

44,3

37,2

1,8

1,1

1,1

8,1

8,8

8,0

Production

1 189,8

2 272,7

2 596,1

69,0

59,5

77,3

85,7

75,8

97,1

Domestic consumption

177,9

165,4

206,3

1,1

0,9

1,0

5,0

6,0

6,0

Exports

1 033,0

2 118,5

2 380,0

69,5

60,0

77,0

80,0

70,6

90,0

Ending stocks

44,3

37,2

50,0

1,1

1,1

1,6

8,8

8,0

9,1

Current market trends

In March 2018, the authorities delayed the entry into force of the law on cancellation of the VAT refund for rapeseed exports until January 1, 2020, and Ukrainian traders started making forward contracts for the supply of new crop rapeseed. The prices increased the last season starting prices by nearly 45 USD/t, and varied within 421-425 USD/t CPT (delivery in August-September of 2018).

  

In late June 2018, the market received the first batches of new crop rapeseed. Due to rather good rates of the mass harvesting campaign, the bid prices continued declining on both export and domestic markets.

But since the beginning of July, the prices started increasing due to the lagging figures of the oilseed yield in Ukraine, as well as reduction of the estimations of rapeseed production in France and Germany. The prices increased by nearly 30 USD/t, and in early August 2018 the figures totaled 420-428 USD/t CPT and 13`000-13`400 UAH/t CPT-port (up 1`200-1`300 UAH/t).

In early August, the bid prices of processors reached 13`300 UAH/t, taking into account the cost of delivery, while traders declared their prices in grain elevators at the same level. According to agrarians, traders proposed more favourable pricing conditions.

In early August, the bid prices for rapeseed oil were declared at the level of 750 USD/t DAP (down 30 USD/t compared with the same period last year). A large number of offers of vegetable oils in the world, including the EU, made the oil delivery on the market rather unattractive for sellers.

 

 

As for rapeseed meal, in late July and early August 2018 companies-producers declared the prices at 230 USD/t FOB and 210 USD/t DAP, respectively.

 

Julia Ivanitskaya, oilseed market analyst at APK-Inform Agency

Viktoria Zelenaya, oilseed market expert at APK-Inform Agency