Agroliga : Tendencies of Ukrainian agrarian market in January 2021.

Traditionally, representing to your attention a brief overview of the world and Ukrainian agrarian sector news.

On December 31, 2020 export quotations for raw sunflower oil from Ukraine rushed to the level of $ 1200 per tonne FOB, which became a new record for the last 4 years. As traders note, the sunflower oil market has a large number of its own support factors, including a reduction in production in all countries of the Black Sea region in 2020, as well as the entry into force of a 30% duty on sunflower exports from Russia from January 1, 2021.

According to the results of 2020, the average value of the FAO vegetable oil price index was 99.1 points, which is 15.9 points (19.1%) higher than the level of 2019 and is the highest in the last three years. In addition, the average value of the FAO vegetable oil price index in December was 127.6 points, up 5.7 points (4.7%) from the previous month, and reached its highest level since September 2012. Analysts noted that the continued growth of this indicator in December was mainly due to the increase in prices for palm oil, as well as an increase in quotations of soybean, rapeseed and sunflower oils.

The Cabinet of Ministers of Ukraine launched the process of reviving the Ministry of Agrarian Policy and Food. It is noted that since January 6, 2021, the Resolution of the Cabinet of Ministers of Ukraine No. 1344 came into effect, which cancels the liquidation of the Ministry of Agrarian and Industrial Development.

There were listed countries which Ukraine will develop trade relations in 2021. For Ukraine, the issue of establishing trade relations with Turkey always remains relevant, because it is this country that receives many requests from business. There is also a request to develop relations with Asia and the Mediterranean region. It is planned to update the free trade agreement with the EU, because the 5-year period has already passed, and also to expand the agreement with Canada. The first stage of preparation for negotiations with Egypt, Tunisia and Jordan has already begun. A large project is brewing with the PRC, since it is obvious that this is our largest partner. In 2020, exports to China grew by 92% in 11 months. There are grounds for liberalizing international trade.

The US Department of Agriculture (USDA) lowered its forecast for world corn production by 10 million tons from the forecast a month earlier. In the United States, corn production decreased by 8.3 million tons compared to the December forecast (368.5 million tons). Experts also lowered their estimates of corn exports and ending stocks - 64.7 million tons and 39.4 million tons, respectively. In Argentina, estimates for maize exports and ending stocks remained flat, according to the report. At the same time, the country's production potential has been reduced to 47.5 million tons (49 million tons in December). In Brazil, experts predict corn production at 109 million tons. China's import potential has been increased to 17.5 million tons. For Ukraine, the USDA report did not bring any changes - the balances remained stable.

This week, at the ports of Ukraine (CPT-port site), the growth of prices for wheat continues, and at an even more active pace. This was reported by APK-Inform. 'This trend is due, on the one hand, to the rapid rise in grain prices on the FOB basis in accordance with the dynamics in the world market in general and in the Russian market in particular against the background of a decrease by USDA experts in the forecast of world production (primarily due to China) and ending stocks of wheat in 2020 / 21 MG - up to 772.6 and 313.2 million tons (which, however, still exceeds the indicators of the previous season), and also due to the intention of the Russian government, in addition to quotas, to raise the export duty on wheat and not to zero it from the new season. On the other hand, the growth in prices is facilitated by the restraint of sales by farmers and high competition in the domestic market between traders and processors.' However, the sharp rise in prices for Black Sea wheat reduces its competitiveness in the world market, primarily in comparison with the European product. In particular, prices for milling wheat from the EU are $ 2-3 per tonne cheaper. It is noted that the market is awaiting the results of several international tenders, which will help determine the further price trend, however, in general, trading activity is low.

In 2020, 187.9 thousand tons of sunflower seeds were exported from Ukraine in the amount of $ 65.16 million, which is 2.3 times more than in the same period of 2019 (82.25 thousand tons in the amount of $ 34.57 million). One of the features of 2020/21 MY is the increase in exports of sunflower seeds from Ukraine in September-December, namely from the 2020 harvest. The press service of the Ukroliyaprom association reports. 'In the first four months (September-December) of 2020/21 MY, 148.9 thousand tons (79% of the volume of 2020) were exported from Ukraine for $ 49.8 million ($ 334.4 per ton). Growth versus the corresponding period of MY 2019/20 - by 10.5 times'.

In 2020, Ukraine produced 5.9 million tons of unrefined sunflower oil. The production of sunflower oil in the reporting period is 3.6% higher than the result of 2019.In particular, in December 2020, Ukrainian oil extraction plants produced 556.38 thousand tons of unrefined sunflower oil, which is 8.5% less than in December 2019.

The International Finance Corporation (IFC) and the State Secretariat for Economic Affairs of Switzerland SECO will continue to support the project of agricultural receipts, which gives Ukrainian farmers access to financing in the amount of $ 1 billion. In partnership with SECO, in 2015 the project was introduced in selected regions of Ukraine. Since 2018, the tool has been implemented throughout the country.

With kind regards, team of GC 'Agroliga'.