Over last years Ukraine showed itself as a significant and reliable exporter of feed barley on the global market. Season-2015/16 was not an exception. Despite all difficulties such as lower production, reserved farmers selling and currency fluctuation, Ukrainian exporters managed to fulfil contract obligations and strengthened positions of Ukraine.
Place of Ukraine on global feed barley market
Despite lower production and export potential Ukraine strengthened its position on the global market of feed barley and moved to 3rd place in the rating of largest exporters (4th in 2014/15 MY). Ukraine exported 4.3 mln tonnes of the grain.
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Key exporters of feed barley |
||||
|
|
2012/13 |
2013/14 |
2014/15 |
2015/16 |
|
EU |
4 966 |
5 741 |
9 547 |
10 000 |
|
Australia |
4 484 |
6 217 |
5 219 |
5 800 |
|
Russia |
2 237 |
2 709 |
5 336 |
4 000 |
|
Ukraine |
2 134 |
2 476 |
4 456 |
4 300 |
|
Argentina |
3 581 |
2 891 |
1 552 |
2 500 |
|
World total |
19 632 |
22 854 |
29 016 |
29 420 |
Export potential and destinations
Ukraine exported feed barley to more than 30 countries. Saudi Arabia is a traditional key destination, it imported 2.3 mln tonnes of Ukrainian feed barley.
Asia, Africa and Middle East increased import of Ukrainian feed barley in 2015/16 MY. Japan and Libya bought 177 thsd tonnes and 398 thsd tonnes of the grain in Jul-Aug 2015/16 MY, up 5 and 2 times correspondingly. Moreover, Ukraine started to supply barley to Oman, Morocco, RSA and Qatar. High interest of China to feed barley was a positive moment for Ukraine. China imported record 686 thsd tonnes of Ukrainian barley in Jul-Aug 2015/16 MY, up almost 3 times on year. Moreover, Ukraine opened such perspective markets as Spain and Greece.
However, Ukraine lost such large market as Turkey that significantly reduced barley imports this season due to higher domestic production. Turkey imported only 5.5 thsd tonnes of barley against 394 thsd tonnes year ago.
Traditionally, export activity on barley market is the highest during the first half of the season. Ukraine exported more than 3.9 mln tonnes of the grain by the end of December, after that trade activity started to decline as demand lowered. Reserved farmers selling also influenced on export potential.
Feed barley price dynamics in 2015/16 MY
Barley prices were announced at 180-185 USD/t (offer FOB) and 3200-3470 UAH/t (bid CPT-port) in July. Higher supply led to lower prices that reached 171-175 USD/t FOB and 3150-3250 UAH/t СРТ-port in August.
Since mid-September prices started to increase due to higher trade activity and better demand. Reserved farmers selling supported prices too. Farmers worried about unfavorable weather for planting campaign. Since the late October prices reached maximum level – 185-193 USD/t FOB. Hryvnia devaluation additionally supported prices on СРТ-port basis that reached 3650-3900 UAH/t (168-172 USD/t) by late October.
Since November, FOB prices had been decreasing due to lowering of trade activity. In January prices were mainly declarative and new contracts were not signed. During the second part of the season offer prices declined from 180-185 USD/t FOB to 162-165 USD/t FOB.
Demand from traders and reserved farmers selling were the key price-determining factors on CPT-port basis. Bid prices for barley started to decline since late November and than had been increasing since January due to higher prices for corn and limited supply of large barley lots because of slight increase of trade activity. Bid prices reached maximum level by late February – 3900-4300 UAH/t СРТ-port (145-150 USD/t СРТ-port). Up to the end of the season the situation was rather stable, trade activity was low and bid prices mainly totaled 3800-4050 UAH/t СРТ-port and 138-145 USD/t СРТ-port.
Generally, summarizing the results of 2015/16 MY we can point out that uncharacteristic price situation particularly in November can be explained by hryvnia devaluation and lower farmers selling of large barley lots as farmers were waiting for higher prices. As a result, farmers faced sharp decline of demand from exporters.
Market expectations
Mainly market operators expect price situation and trade activity in 2016/17 MY to repeat the trend of 2015/16 MY. Taking to account preliminary results of spring planting campaign, APK-Inform forecast barley crop at 7.7 mln tonnes, up 7% on year.
Currently the interest in new-crop barley is low and purchasing prices are low too – 140 USD/t СРТ-port or 155 USD/t FOB. Farmers do not want to sign contracts and wait for higher prices, especially if compare with corn that is trading actively at 165 USD/t СРТ-port or 186 USD/t FOB.
Trade activity will increase with new crop entering the market. However, it does not mean that prices will decrease rather than reach new record.
Anna Tanskaya, APK-Inform Agency
