Ukrainian Grain Market

AGRO PERSPECTIVE «Ukrainian Grain & Oilseed Market » February 3, 2011`4`(309)

Within reporting week Ukrainian domestic grains market has much strengthened. Several companies (Khlib Investbud, Kernel and Nibulon) which had earlier received grains   export licenses (but didn’t have enough grains) have significantly raised their purchase prices in order to attract grains sellers. In ports, food wheat price has reached UAH2,100 per MT, — thus having marked UAH record high price; it is to be admitted, US$ record high price  (US$380–390 per MT, CPT port) had been registered within end Mar 2008. It is to be mentioned, within this week some traders had to raise their grains purchase prices in ports as vessels have already arrived to be loaded. 
In meanwhile, agrarians understand that presently Ukrainian domestic market wheat/maize prices must be (if global market prices are taken into account)much up against current market prices and therefore refuse to make sales at these prices. In some cases, agrarians now declare even UAH2,300–2,400 per MT food wheat sale prices (EXW-ex-elevator) — what is, in fact, quite reasonable (taking into account Ukrainian current export prices). It is very simple to prove reasonability of UAH2,300–2,400 per MT food wheat sale prices: UAH2,700 per MT (or US$340 per MT FOB Black Sea) minus UAH300–400 per MT (which are to be spent for wheat transportation/transshipment). In fact, agricultural producers are easy to understand: fuels/lubricants, fertilizers and agricultural machinery prices have already much grown, so big financial means are needed to successfully carry out oncoming spring sowing campaign. Besides, agrarians don’t like to loose UAH300–400 per MT “potential” profit, either. Thus, under these conditions, agrarians presently prefer to abstain from grains (esp. food wheat) sales until domestic market grains prices grow up to acceptably high.                 
Within reporting week flour-quality wheat and feed maize enjoyed highest market demand among all grains.
As of this week, feed barley was purchased mostly by mixed feeds plants and beer producers (obliged to buy feed barley due to brewing barley deficit).
Within this week feed wheat sale/purchase operations number was very low.

EXPORT

• Barley 

As earlier, within reporting week feed barley market trade activity remained low due to processors slack demand; it is to be admitted, no trader made feed barley purchases after export quoting regime introduction.
As of this week, feed barley purchase prices ranged within UAH1,700–1,880 per MT (EXW-ex-elevator, depending on regions).
Within reporting week feed barley US$ purchase prices were US$265–275 per MT (FOB Black Sea big ports: Pivdenniy, Illichivsk, Odesa).

• Wheat     

Within reporting week feed wheat was purchased by just few traders. As of this week, feed wheat market offer prices have slightly grown, — to UAH1,600–1,800 per MT (EXW-ex-elevator, depending on regions), up against last week.                                   
Within this week feed wheat FOB basis export prices ranged within US$290–300 per MT. 
It is to be admitted, Ukrainian food wheat external markets demand remained high within this week. Consequently, 3 and 2 classes food wheat export prices (if global market prices conjuncture is taken into account) have boosted against previous week, — correspondingly up to US$330–340 per MT (FOB Black Sea ports) and US$338–360 per MT (FOB Black Sea ports). 

Maize 

Within reporting week feed maize market purchase prices ranged within UAH1,620–1,800 per MT (EXW-ex-elevator, depending on regions/contract conditions).
Traders were ready to pay UAH1,850–1,900 per MT in ports for big lots.  
As of this week, feed maize export prices fluctuated within US$285–300 per MT (FOB Black Sea ports).

Grain export prices, USD/ò
Grain type	02.02.11		26.01.11		January 2011 average	December 2010 average	November 2010 average
	Min	Max	Min	Max
FOB, Ukrainian Black Sea port
2nd class wheat*	338	360	335	355	330	308	298
3rd class wheat**	330	338	325	335	313	288	279
Feed wheat	290	300	285	300	276	247	244
Feed barley	265	275	260	275	265	255	253
Feed corn	285	300	285	300	278	248	249
Feed peas	310	340	310	340	317	294	276
Wheat bran	195	215	190	200	191	181	183
Oats	215	230	210	220	209	192	186
DAF
Feed corn	245	260	245	260	249	235	233
Rye	200	220	200	220	208	194	180

*- protein content: minimum 12.5%
**- protein content: minimum 11.0%

Processors Activity     

Within reporting week flour millers situation has become even more complicated. Flour millers affirm it has become impossible to purchase grains any more: grain holders refuse to sell grains to them after exporters having raised their grains purchase prices. Still 1 week ago most flour milling integrated plants had been declaring 2 class wheat UAH1,750 per MT purchase price (3 class — UAH1,700 per MT), — but within this week integrated plants have boosted 2 class wheat purchase price up to UAH1,850–1,900 per MT (3 class — UAH1,780–1,850 per MT). However, even despite purchase prices raising, integrated plants get just rare/small lots offers. As a result, flour millers are now working only on earlier purchased grains (whose reserves are getting gradually exhausted).        
Within this week several flour milling integrated plants (earlier being subsidiaries of   State JSC Khlib Ukrayiny)have suspended functioning, what appeared to be one more negative factor to influence Ukrainian flour market. It is to be admitted, State JSC Khlib Ukrayiny has undergone structural reorganization resulting in State Food-Grain Corporation creation, whose statuary capital is presently being formed by way of receiving of integral property complexes of State JSC Khlib Ukrayiny subsidiaries (which are now being liquidated).After being transferred to State Food Grain Corporation, these subsidiaries will become Corporation separate companies.     
However, transference process will last for long period within which these subsidiaries (integrated plants) will have no right to sell flour or to purchase grains resources (until they are liquidated as previous legal entities and registered as new ones, open new bank accounts, get properly subordinated to centralized chief management, etc.). That’s why so far these integrated plants are working on give-and-take conditions.       

Average purchase prices for food grains (ÑÐÒ processing plant), UAH/ò
Region	02.02.11		26.01.11		January 2011 average	December 2010 average	November 2010 average
	Min	Max	Min	Max
2nd class wheat*
Western	1770	1920	1650	1780	1735	1690	1660
Northern	1800	1960	1650	1800	1765	1720	1700
Central	1840	1960	1650	1780	1760	1705	1680
Southern	1840	2000	1660	1760	1760	1700	1690
Eastern	1850	2000	1650	1800	1775	1725	1720
3rd class wheat**
Western	1730	1860	1600	1700	1675	1610	1590
Northern	1750	1900	1600	1720	1695	1635	1590
Central	1770	1900	1600	1700	1690	1625	1600
Southern	1770	1900	1620	1720	1700	1645	1600
Eastern	1780	1900	1600	1720	1695	1635	1630

*- protein content: minimum 12.5%
**- protein content: minimum 11.0%

16.02.2011