AGRO PERSPECTIVE «AGRO+ MILK UKRAINE #41 November 11, 2010.
Within reporting week Ukrainian Antimonopoly Committee has demanded from country dairy market 11 operators (Milkiland-Ukraine, Subsidiary; Managing Company Terra Food Ltd; OJSC Dairy Alliance Ltd; Danone Ltd; OJSC Wimm-Bill-Dann Ukraine; Corporation Klub Syra; CJSC Galychyna; OJSC Shostkynskiy City Dairy Plant; PO Molis Ltd; CJSC Lactalis-Myckolayiv) to assure within this year Nov gradual declining of milk, sour cream, butter and hard cheese wholesale prices.
Dairy producers to which Committee has made claims are Ukrainian market biggest ones: thus, Danone-Unimilk (recently merged company), OJSC Wimm-Bill-Dann Ukraine, CJSC Galychyna and CJSC Lactalis-Ukraine share about 30% of Ukrainian whole milk products’ total market. It is to be admitted, Milkiland-Ukraine, Subsidiary, Terra Food Ltd, OJSC Shostkynskiy City Dairy Plant, Corporation Klub Syra and PO Molis Ltd share about 40% of Ukrainian hard cheeses’ market. It is to be mentioned, Ukrainian 2009 domestic whole milk market trade volume totaled 1.14 mn MT (US$1.44 milliard); hard cheeses’ market — 129,000 MT (US$719 mn).
It is to be admitted, Ukrainian Antimonopoly Committee has been commissioned to start domestic dairy market research by President Viktor Yanukovych who demanded to clarify market situation after dairy products’ prices had sharply grown early this autumn. Thus, as to State Statistics Committee data, within this year early Sept milk average wholesale price had risen averagely by 5.7% (cheese — by 6.9%, butter — by 7.7%). Besides, within this year early Oct milk average wholesale price has additionally grown by 4.7% (cheese — by 5.8%, butter — by 5.3%).
In fact, dairy producers can carry out economically justified lowering only for several of their ready products’ prices (as dairy products’ prices growth has been followed by corresponding raw milk resources’ prices boost). However, experts say producers are most likely to obey to Antimonopoly Committee and decline their ready products’ prices under threat of penalties; experts admit producers will try to reduce their ready products’ prices mostly through usage of cheaper ingredients.
Besides, as of this year Nov 5, Ukrainian Antimonopoly Committee Poltava region territorial branch has recommended to Myrgorodskiy Cheese Integrated Plant Ltd, CJSC Gadiachsyr,
CJSC Globynskiy Butter Plant, OJSC Khorolskiy Baby Food Canned Milk Integrated Plant, OJSC Reshetylivskiy Butter Plant and Bilotserkivska Agroindustrial Group Ltd to resume output of those fermented milk products which belong to Ukrainian family minimal consumer budget.
Nowadays Poltava region is one of Ukrainian regions characterized with highest dairy products’ outputs. Thus, as to Ukrainian Antimonopoly Committee monthly data, within last 3 years only 3 among Poltava region main dairy producers (OJSC Lubenskiy Dairy Plant, CJSC Kremenchutskiy City Dairy Plant and CJSC Pyriatynskiy Cheese Plant) have been making fermented milk products which belong to group of social goods (i.e. milk fat 2.5% and below, fermented cheese fat 9% and below, sour cream fat 20% and below as well as butter fat 72.5% and below).
Taking into consideration above-mentioned facts, Ukrainian Antimonopoly Committee has made conclusion that these 3 economic entities (OJSC Lubenskiy Dairy Plant, CJSC Kremenchutskiy City Dairy Plant and CJSC Pyriatynskiy Cheese Plant) have gained monopoly positions on Poltava region market of those fermented milk products which belong to group of social goods and, besides, can abuse advantageous of their monopoly positions under certain conditions. However, Antimonopoly Committee admits their monopoly positions have been motivated also with absence of competition on Poltava region fermented milk products’ market. Ukrainian Antimonopoly Committee has ordered that these companies should report within 10 days to Committee Poltava region territorial branch on results of their having examined Committee demands.
As to State Statistics Committee report, within Jan-Oct 2010 Ukrainian all categories companies have produced in total 9,812.900 MT raw milk (all kinds) , down 3.5% against 2009 similar (incl. agricultural companies — 1,922.300 MT, down 1.1% as of 2009 similar and population individual economies — 7,890.600 MT, down 4.1% as of 2009 similar).
As to Committee, within Jan-Oct 2010 all categories companies have produced 1,914.100 MT cow raw milk, down 1.1% against 2009 similar.
As of this year Nov 1, Ukrainian cows’ number has shortened to 2,718.200 heads, down 3.5% against last year similar. It is to be admitted, these are mainly agricultural companies which have lowered cows’ number.
Within reporting week Ukrainian dairy market situation remained same as within previous week: as earlier, domestic market dairy products’ demand was slack; export rates remained slow as Ukrainian export prices were considered non-competitive on external markets. So, within this week domestic market purchasers anticipated for prices’ further decline and therefore assumed wait-and-see policy. In meanwhile, within this week dairy products’ offer prices remained significantly up against potential buyers’ purchasing capacity.
SMP
Within this week domestic market high-quality SMP offer prices remained UAH23–25 per kg (low-quality — UAH21–22 per kg), same as within last week.
It is to be admitted, within this week SMP was not exported to EU countries as they considered Ukrainian SMP export prices too high. However, those Ukrainian market operators which have right to export SMP to RF and Kazakhstan sold it at US$3,000 per MT to these countries. Also, Ukrainian exporters shipped out SMP to non-CIS countries at US$2,600 per MT.
WMP
As well as SMP, within this week WMP prices remained UAH32–35 per kg (unchanged against previous week).
As of this week, Ukrainian WMP average export price was US$3,800 per MT.
BUTTER
Within reporting week Ukrainian domestic market butter prices continued going down.
As to Ukrainian traders/producers data, within this week butter 72.5% fat domestic market prices have declined to UAH40–42 per kg (down against last week UAH41–43 per kg). Prices’ decline is motivated with slackening of consumer demand for expensive butter, market operators’ butter high reserves and fact that dairy plants needed circulating assets for raw milk further purchases.
Due to all above factors, Ukrainian butter export has become unattractive: taking into account domestic market prices, butter 72.5% fat average export price should have already risen to US$5,000 per MT. However, it is simply senseless to sell butter at this price.
CHEESES
As to Ukrainian producers data, within reporting week domestic market demand for cheese (as well as all other dairy products) has somewhat slackened.
Within this week cheeses 50% fat domestic market offer prices have declined to UAH48–50 per kg (down against last week UAH49–52 per kg); it is to be admitted, there were rather large spreads between prices of same kind of cheese depending on producer, region and cheese amounts remained on warehouses.
As of this week, cheeses 50% fat export prices remained US$5,400–5,500 per MT (unchanged against last week).
WHEY
Within reporting week domestic whey market price has risen to UAH7,0 per kg (up against last week UAH6,5–6,6 per kg); export offer price has declined to US$750 per MT (down as of previous week US$780 per MT).
Within reporting week domestic market demineralized whey prices have shortened to UAH8,2–8,5 per kg (down as of last week UAH8,5–8,6 per kg); demineralized whey export prices ranged within US$900–920 per MT.
CASEIN
Within reporting week domestic casein market situation remained same as within previous week. As of this week, Ukrainian casein reserves have been already exhausted.
Within this week domestic market casein prices fluctuated within UAH61–66 per kg; domestic sales were slack.
There was no casein export within this week. As of this week, casein export offer prices remained US$7,900–8,000 per MT, unchanged against previous week.
Ukrainian dairy products’ export prices (US$ per MT)
