Performance of the fat-and-oil industry of Ukraine in 2016

Source

APK-Inform

3632

According to the association Ukroliyaprom, the year of 2016 for the fat-and-oil industry of Ukraine demonstrated a significant growth in the production and exports of sunflower oil, due to the record harvest volumes of sunflower seed and keeping of the export duties for the oilseed, which provided its maximum level of provision to domestic oilseed processing facilities.

In December 2016, the growth in production of sunflower oil reached its highest peak for all previous years - 0.56 mln tonnes.

In 2016, the general production of sunflower oil in Ukraine totaled 4.67 mln tonnes, against 4.04 mln tonnes in 2015. Ukraine managed to reach such figures through a significant increase in sunflower seed processing in September-December period.

Generally, in 2016 the growth in sunflower oil production (without oil mills) reached 118.5%.

The production of rapeseed oil decreased by 45.6%, due to the large-scale exports of rapeseed from Ukraine.

In 2016, the exports of soybean oil slightly reduced in physical terms by 0.7% compared with 2015.

In the reporting year, the exports of sunflower oil reached a record high level at 4.8 mln tonnes.

The exports of rapeseed oil significantly reduced (down 38%), due to reduction of its production by almost 46%. At the same time, soybean and rapeseed oils of Ukrainian origin were in favour on the global market, in particular in the EU countries.

Also, in 2016 Ukraine continued increasing the exports of oilseed meals.

 

Margarine products

In 2016, Ukraine demonstrated an increase in the exports of margarine products and specialty fats, in terms of a decline in the imports of such products to Ukraine. The exports of margarine products and specialty fats (CN code 1517) increased by 27.3% compared with 2015.

In the reporting period, the exports to the EU countries increased in more than four times. Estonia, Lithuania, Poland and Romania became the main importers of Ukrainian margarine products among the EU countries. The exports to the EU countries mainly increased due to work of the EU-Ukraine Association Agreement. At the same time, the imports of the reporting products from the EU countries increased in 1.3 times in terms of the general decline of margarine imports to Ukraine (the supplies from Russia almost stopped).

In 2016, Belgium, the Netherlands, Italy and Romania became the main countries supplying margarine to Ukraine.

Also, the CIS countries remained the main consumers of Ukrainian margarine products and specialty fats. But the exports from Ukraine to the region declined by 13% (the exports to Russia almost stopped).

Ukraine started increasing the exports to the Middle East countries. In particular, the exports to Egypt grew in 1.6 times.

Also, the exports to American countries doubled. In particular, Ukraine started exporting margarine to the USA, but the volumes were low-scale.

 

Preliminary results of the industry in the first half of the season-2016/17

In the season-2016/17, Ukraine demonstrated a record harvest of sunflower seed, which according to preliminary estimations of the State Statistics Service of Ukraine, totaled 13.6 mln tonnes in registered weight, up 21.7% compared with the harvest in 2015.

 

Table 1. Ukraine: production of major oilseed crops

Crop name

Planted areas, `000 ha

Yield, t/ha

Production, `000 tonnes

 

2016/17 MY

(expectations)

2015/16 MY

%

2016/17 MY

(expectations)

2015/16 MY

%

2016/17 MY

(expectations)

2015/16 MY

%

Sunflower seed

6075

5166.3

117.6

2.24

2.16

103.7

13604.5

11181.1

121.7

Rapeseed (winter + spring)

448.8

671.1

66.9

2.57

2.59

99.2

1142

1741.5

65.6

Soybeans

1853.4

2135.6

86.8

2.31

1.84

125.5

4279.1

3930.6

108.9

TOTAL

8377.2

7973

105

     

19025.6

16853.2

112.9

 

Ukraine reached the record growth in sunflower seed production due to expanding of the planted areas by 17.6%, and increasing of the yield by 3.7%.

In terms of a significant increase in the average yield (to 2.31 t/ha), the record production of soybeans reached 4.279 mln tonnes, while the planted areas decreased by 13.2% (down 282 thsd ha).

In 2016, the production of rapeseed declined, due to reduction of the planted areas by 33.1% to 448.8 thsd ha, and lowering of the average yield by 0.8% (down 0.02 t/ha).

Generally, Ukraine increased the general harvest volumes of oilseed crops by 13% compared with the general harvest last marketing year. The harvest reached a record rate at 19.02 mln tonnes.

During 4 months of 2016/17 MY, Ukraine significantly increased the production of vegetable oils. The result was reached at the expense of record production volumes of sunflower oil.

At the same time, the production of soybean and rapeseed oils somewhat reduced, due to the significant exports of soybeans and rapeseed from Ukraine in 2016.

 

Foreign trade in September-December of 2016/17 MY

In 2016/17 MY (September-December), Ukraine exported sunflower oil to 90 countries. In the reporting period, the exported volumes reached 1.797 mln tonnes. In September-December period, India, China, the EU countries (France, the Netherlands, Italy, Spain, the United Kingdom), etc. became the main importers of Ukrainian sunflower oil.

 

Table 2. Countries-importers of Ukrainian sunflower oil in September-December, `000 tonnes

Countries-importers

Exports in September-December

 

2016/17 MY

2015/16 MY

%

India

586.984

478.414

122.7

China

226.823

215.914

105

EU countries, including

372.75

367.44

101.4

Spain

99.291

119.652

83

Netherlands

96.441

70.628

136

Italy

92.555

67.586

136.9

France

30.01

28.58

105

United Kingdom

25.1

22

114

Iran

173.49

33.314

Up 5.2 times

Egypt

82.699

31.263

Up 2.6 times

Turkey

56.154

82.59

68

Malaysia

46.317

60.903

76

Algeria

38.5

16.3

Up 2.4 times

Others

214.083

170.362

125.7

TOTAL

1797.8

1456.5

123.4

 

In the current marketing year, the exports to the EU countries increased by 1.4% in comparison with the same period last marketing year (at the expense of Italy - up 36.9%, and the Netherlands - up 36%), India - up 22.7%, and China - up 5%. Ukraine significantly increased the exports to Iran - up 5.2 times, Egypt - up 2.6 times, and Algeria - up 2.4 times. The exports to Turkey reduced by 32%, Spain - down 17%, and Malaysia - down 24%.

 

Refined sunflower oil

In September-December of 2016/17 MY, Ukraine exported 0.13 mln tonnes of refined sunflower oil. Ukraine exported the product to 20 countries: Malaysia - 24.21 thsd tonnes, the United Arab Emirates - 15.46 thsd tonnes, Egypt - 14.6 thsd tonnes, the CIS countries (including Belarus) - nearly 11 thsd tonnes, Jordan - 11.63 thsd tonnes, the EU countries - 10.8 thsd tonnes, China - nearly 4 thsd tonnes, Iraq - 4.15 thsd tonnes, etc.

The export geography of refined sunflower oil still continues changing. The countries of Asia and the Middle East are the main consumers. The supplies to the CIS countries started declining.

 

Sunflower meal

In September-December of 2016/17 MY, Ukraine exported 1.49 mln tonnes of sunflower meal to 38 countries. The main importers of Ukrainian sunflower meal: the EU countries - France, Spain, Italy, the Netherlands, Poland, the United Kingdom; the CIS countries; Turkey, India, Israel, Morocco, Egypt, etc.

The exports to the EU countries significantly increased - 109.8%. The exports to Turkey significantly reduced by 71.2%, Egypt - down 56.6%. The exports to India increased in 12 times. The exports to Belarus decreased by 6.2%.

 

Rapeseed oil

In July-December of 2016/17 MY, Ukraine exported rapeseed oil to 10 countries (Poland, France, Lithuania, the Netherlands, Italy, China, India, etc.). The exported volumes reached 63.8 thsd tonnes. The exports to the EU countries declined by 21%, and China - down 91.2%.

 

Soybean oil

In September-December of 2016/17 MY, Ukraine exported soybean oil to 18 countries (the EU countries - Poland, China, India, Malaysia). In the reporting period, the exported volumes totaled 53.163 thsd tonnes. The exports to the EU countries increased - 110.9%. Significant growth of the supplies to India - up 26.8 times. But the exports to China significantly reduced by 89.5%.

 

Soybean meal

In September-December of 2016/17 MY, Ukraine exported soybean meal to 16 countries (Hungary, France, Poland, the CIS countries). In the reporting period, the exported volumes reached 84.6 thsd tonnes.

The exports to the CIS countries decreased by 70.6%, Turkey - down 62.8%. The exports to the EU countries significantly increased - up 4.4 times, Georgia - up 3.5 times.

 

Major trends and directions in 2016/17 MY

Cheapening of sunflower oil on the global market in terms of rising prices for soybean and palm oils. In the beginning of 2016/17 MY, the prices for all three types of vegetable oils were almost equal (750-800 USD/t). In the following months, the premium between vegetable oils will continue reducing at the expense of active growth of palm oil prices.

The global market of oilseeds is the key factor influencing the Ukrainian oilseed market, in particular the demand from India and China, as well as the weather conditions in the major oilseed producing regions.

Also, 2016/17 MY demonstrated the complete dependence of Ukrainian raw commodity markets not only on the global market situation and weather conditions, but also on fluctuations on the foreign currency market in Ukraine. Fluctuations on the foreign currency market affect not only the price situation, but also the rates of trading activity with agricultural commodities, including sunflower seed.

Strengthening of the shadow market. Agricultural producers mainly try to sell sunflower seed for cash, referring to cancellation of the simplified tax system. Such situation significantly disguises the situation on the oilseed market, causes its shadow development, slows down oilseed sales or processing.

 

Forecast for the second half of the season-2016/17

According to experts, in 2016/17 MY Ukraine will face a significant increase in sunflower seed processing volumes and reduction in rapeseed production and processing. At the same time, the exports of rapeseed will grow to 90% of the harvest volumes, and soybean exports will increase to 2.8-3 mln tonnes.

In terms of the record production of sunflower seed at 13.6 mln tonnes, Ukraine will increase its exports to 0.4-0.5 mln tonnes.

It is expected that

  • Ukraine will increase exports of sunflower oil to the EU countries due to rapeseed harvest failure in the region;
  • Ukraine will increase usage of sunflower oil on the domestic market for production of margarine and mayonnaise.

The problem of sunflower meal sales to Belarus gets worse, due to the current outbreak of African swine fever virus, and the exports to Turkey also declined.

Domestic oil-extraction enterprises will condition developing the required conditions for maximum processing of soybeans and rapeseed.

Increasing of the production and exports of goods with high added value (bottled refined oils, margarine products and specialty fats, mayonnaise).

Increasing of the share of port shipments in the general exports, as well as increasing of the required capacities for vegetable oils transshipment and storage in the ports.

Reducing of the logistics costs and improving the efficiency of fat-and-oil products exports.

Expansion of sales markets for domestic fat-and-oil products, in particular opening of the Chinese market for Ukrainian sunflower meal.

The main tool for further stable development of the fat-and-oil complex of Ukraine is keeping of the export duties on sunflower seed, as well as for further processing of soybeans and rapeseed. The customs duties provide the domestic market with stable raw material volumes, and provide investments in new efficient technical equipment.

 

Stepan Kapshuk, General Director at the association Ukroliyaprom

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