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#38(38)23.09.2013

Main provisions

• Sunseed prices are increasing while sunoil is falli ng • BSR: Sunoil production and exports, season’s summar y • Precipitation slows down fieldwork progress, farmer s may plant far less than projected. • Romania may obtain a record sunflower crop • Rapeseed exports from the Black Sea region go at th e record pace

1. PRICES AND TRENDS

Sunseed market

Similar situations are observed in the Black Sea sunseed markets. Pressured by an abundant sunseed crop, prices sagged substantially, even below the 2011/12 level. At the same time, the market is locally supported by rains impeding large-scale sunseed harvest and making sunseed supply extremely scarce at the moment. Another important bullish factor in Russia and Ukraine remains a feedstock shortage in the market against the background of increased crushing capacities.

Bulgaria is vividly shipping sunseed abroad. 33.6 KMT of this commodity was exported during the 16 days in September. Another 30 KMT of export sunseed is expected to be shipped in the near term. Prices are announced at BGN 450-500/MT – this is far below not only last year’s BGN 920-950/MT but also BGN 640-650/MT in the record 2011/12 season.

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Sunoil market

A downward trend continues in the sunoil export market. Over the week, Black Sea sunoil fell in price by USD 10/MT to USD 860/MT (ask) and USD 850/MT (bid) FOB for October delivery and USD 855/MT against USD 845/MT for November delivery. The market is being pressured by bumper sunseed crops in Ukraine, Europe and the world.

At the same time, soy oil price continues rising: Argentine oil closed the week up USD 10/MT. As a result, the price spread between soy oil and sunoil widened to USD 35/MT in favor of the latter. In this connection, an increase in demand for sunoil of Black Sea origin may be expected.

During September 1-11 Russia exported 86.2 KMT of sunoil and 8 KMR of sunmeal. Vegoil imports totaled to 18.7 KMT. Exports of sunoil from Ukraine totaled to 26.2 KMT, of sunmeal – 27.6 KMT.

Oilseeds and vegoils export prices, USD/MT Commodity Origin September 20, 2013 September 13, 2013

Sunseed FOB Black Sea 410 400 CIF Europe 440 435 CIF Turkey 420 405

Sunoil FOB Black Sea (UA) 860 870 CIF Europe 950 950 CIF Turkey 895 900

Sunmeal FOB Black Sea (UA) 245 230 CIF Europe 305 295

Soybean FOB Black Sea 485 480 FOB Argentine 540 560 FOB Brazil … … CIF Europe 560 560

Rapeseed FOB Black Sea 490 490 CIF Europe 500 495

Linseed CIF Europe 605 595

Oilseed complex exports through Ukrainian seaports Period Sunoil Sunmeal Sunseed Rapeseed Rapemeal Rapeoil Soybeans

September, 1-15 26.22 27.64 0 205.47 4.30 3.00 0 August 13 166.32 9.50 0 557.56 9.90 0 0

July 13 114.15 39.84 0 213.53 2.28 0 3.71

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2. TOPIC OF THE WEEK Black Sea region: Sunoil production and exports

♦ Ukraine. According to the State Statistics Service, Ukraine’s large in medium-sized crushers produced 3096 KMT of sunoil in MY 2012/13, or down 13% from 2011/12 season. Production started with all-time highs early in the season and decreased to minimum volumes towards the season end. In particular, large and medium-sized crushers produced just 69 KMT in August that is the lowest level since August 2005. Sunoil production decreased as the stocks decreased and prices rose.

Ukraine: Sunoil production by large and medium-sized enterprises, KMT

2012/13 2011/12

September 218 172 October 352 337

November 331 352 December 297 373 January 253 319 February 267 300

March 290 343 April 237 341 May 244 340 June 199 318 July 193 236

August 133 150 Season 3014 3581

Noteworthy is that UkrAgroConsult’s adjusted figure for 2012/13 sunoil production is 3.6 MMT including production at small mills. Therefore no surprise that export figures indicate Ukrainian sunoil deliveries to foreign markets at 3244 KMT. This is the largest volume that even exceeded the 2011/12 level of 3227 KMT. The situation is explained by a more remunerative sunoil price in the past season compared to other vegoils.

The key export destinations for the Ukrainian product remain unchanged: India, the EU, Egypt, China and Turkey. The top list of sunoil exporters changed as Creative entered the top three companies.

♦ Russia. Sunoil production in Russia amounted to 3 MMT in 2012/13 season, or down 16% from 2011/12. Its output shrank from month to month, and totaled just 133 KMT in August. The end of the season featured a decline in crushing even though sunseed stocks appeared larger than last year. The reason is simple: crushers preferred to refrain from buying feedstock at high prices on the threshold of an abundant 2013/14 harvest.

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Therefore crushers used up all the left sunseed in July-August and then stopped operation for a technological pause somewhat earlier than usual. In this connection, Russia’s sunoil output in September 2013 can be expected to exceed the average for the month.

Russia: Sunoil production, KMT

2012/13 2011/12

September 218 172 October 352 337

November 331 352 December 297 373 January 253 319 February 267 300

March 290 343 April 237 341 May 244 340 June 199 318 July 193 236

August 133 150 Season 3014 3581

Russian sunoil exports fell 32% to 944 KMT in the past season due to weak domestic production. It is worth adding that Russia imported a record 729 KMT of palm oil in MY 2013/14.

Russia: Sunoil exports, KMT

2012/13 2011/12

September 26 24 October 61 65

November 71 140 December 92 127 January 110 95 February 102 69

March 131 186 April 82 187 May 127 209 June 64 159 July 46 79

August 31 52 Season 944 1392

♦ Romania. Sunoil production totaled 19.9 KMT in July against 17.4 KMT in June and 15.3 KMT in July 2012. Romanian crushers produced 246.7 KMT of sunoil in September-July, and its output for the whole season can be expected at 260 KMT.

Romania exported 105 KMT of sunoil in September-June, or 46% of all its volume produced at that time.

In the new 2013/14 season sunoil production in Romania must recover due to the record sunseed crop, which may reach 1.9 MMT.

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3. WEATHER. CROP CONDITIONS. FIELD WORKS

♦ Ukraine. Late crops are at the ripening and harvesting stages. Sunflower is at the stages of ripening and full seed ripeness. Its plantings are to be harvested intensively once dry weather sets in. While harvesting, sunseed humidity should be monitored (10-12%), as well as the development and spread degree of white and grey rots.

Sunseed and soybean harvested in rainy weather are to be dried to a humidity level allowing their long-term storage. Soybean plants of early-ripening varieties have achieved ripeness and their harvest has begun.

The harvest pace increasingly lags behind last year: 553 Th ha less has been harvested in 2013 than in 2012. So, as of September 18, farmers harvested 3093 KMT of sunseed from 1852 Th ha with an average yield of 1.75 MT/ha. 3403 KMT of sunseed with an average yield of 1.47 MT/ha was harvested last year.

As of September 18, farmers harvested 396 KMT of soybeans from 206 Th ha with a yield of 1.92 MT/ha. Due to rains, harvest progress is two times as slow as last year. Over the week, soybeans were harvested from just 38 Th ha with a crop of 75 KMT.

Winter rape planting was only completed on 700 Th ha, i.e. this work lags 25% behind schedule (925 Th ha). Remarkably, the pace of rape planting for the 2014 harvest is the slowest since 2007.

♦ Russia. Rains complicate fieldwork in Russia, too. As of September 20, farmers harvested 1.7 MMT of sunseed from an area of 806 Th ha (1.4 Ml ha in 2012, 514.7 Th ha in 2011) with a yield of 2.15 MT/ha (1.68 MT/ha in 2012, 2.07 MT/ha in 2011).

Soybeans were threshed on 218.1 Th ha with a total crop of 383.9 KMT and a yield of 1.76 MT/ha.

♦ Bulgaria. The weather conditions became better for fieldwork in Bulgaria. Warmer, dry weather set in across the country that allows farmers to continue rape planting and complete sunseed harvest in some regions. As a reminder, the optimum time for planting rape in the country expired in the middle of September.

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♦ Romania. Air temperatures in Romania are normal for this period, averaging +12..+19°C. Precipitation is low – rains fall mostly in isolated areas. Soil temperature at a 5 cm depth varies within +11..+22°C, facilitating normal growth of winter cr ops. Moisture reserves in a 20-cm soil layer are within a normal range owing to abundant precipitation the country received in early September. Farmers report the end of sunseed harvest with yield appearing far above last year’s. Rape planted at the optimum time has begun emergence and first-leaf formation. In addition, many growers continue planting.

♦ Moldova. Lower-than-usual temperatures and abundant precipitation dominated the country on September 16-22. Average weekly air temperature was 13.0..15.5°C, or 0.5-1.5°C below normal. 60% of Moldova received 23-50 mm of precipitation over the week (0.5-1.0 of its normal monthly rate). 8-20 mm fell in the rest of the country (70-180% of weekly normal). Sunseed harvest continued in the country. Some farmers planted winter crops.

4. FOREIGN ECONOMIC ACTIVITIES Rapeseed exports: unprecedented activity

Black Sea exporters have supplied more than 1.5 MMT of rapeseed to world markets in 2013. The pace of rapeseed exports is record rapid, therefore very little rapeseed can be expected to remain in the region until the New Year.

The most likely reason why international shipments are so active from the very first days of the season is an opinion widespread in the market that this crop’s price will not rise in 2013/14 season. Once the price recovered after having hit the bottom early in the season, sales revived.

In addition, the rapeseed export season started earlier because of an early harvest in the Black Sea region: farmers kicked off this campaign on average 10-20 days ahead of normal time.

At the same time, one should keep in mind that winter crop planting for the 2014 harvest lags behind its normal pace in most of the Black Sea countries. In view of the EU ban on the use of neonicotinoids, which may lead to an additional cut in Romanian and Bulgarian rape plantings, the Black Sea harvest can be expected to shrink next year. Therefore it is not ruled out that 2013-crop rapeseed remainder (if any) will be bought up next season for much higher prices than now.

♦ Ukraine supplied 791 KMT of rapeseed to foreign markets in the two months of the new 2013/14 season, including 576 KMT in August. This is an absolute monthly export record. Moreover, another 206 KMT of rapeseed was shipped abroad through Ukraine’s commercial seaports during the first 15 September days alone. So, Ukraine has already exported 1 MMT – exactly half its export potential.

USD 460/MT

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Ukraine: Rapeseed exports, KMT

2013/14 2012/13

July 215 49 August 576 204

September (1-15)* 206 129 Total 997 382

Export potential* 1900 1270 * - estimates of UkrAgroConsult

Noteworthy is an expansion in the range of Ukrainian rapeseed export destinations, in particular increasing interest from Pakistan.

Besides, Ukraine has exported 9.1 KMT of rape oil this season. Though insignificant, this volume is three times larger than last year. The rape oil was shipped mostly to the EU, while small parcels went to China, too.

Nevertheless, rapeseed crushing in Ukraine will most likely not reach a serious level this season because crushers prefer working on sunseed, which is moreover cheaper than rapeseed price in the domestic market now.

♦ Russia. Although rapeseed harvest in Russia is not even half complete yet, the rapeseed market has evidently revived. Russia exported about 31 KMT during the two months of the season against 0.02 KMT at the same time last year. Export shipments are now at an all-time high for this time.

It is explained by the fact that the higher the overall sunseed crop, the less interesting rapeseed is for crushers. As a result, rapeseed exports from Russia were brisk this season.

8.6 KMT of rapeseed was exported between September 8 and 14. Thus, Russia has shipped abroad 47 KMT this season (July/June). The range of rapeseed export destinations also showed an interesting trend this season. While the lion’s share went to the EU (Germany, Denmark, Latvia), Turkey and Iran.

Besides, exports included 57 KMT of rape oil – also an all-time high for these two months. The commodity went to the EU, Israel (0.7 KMT) and China (1 KMT).

As a reminder, Russia harvested rapeseed from 606 Th ha (45% of planted acreage) by September 20. Its overall crop may amount to a record 1.4-1.5 MMT.

♦ Bulgaria. According to current reports, Bulgarian rapeseed exports between July 1 and September 16 totaled 228 KMT, of which 212 KMT was shipped to the European Union and the rest went to Turkey. Bulgarian exporters shipped abroad just 66 KMT of rapeseed at the same time last year as they held back sales expecting prices to rise on the global crop failure.

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♦ Romania. The lean season of 2012/13 saw Romanian rapeseed exports at a mere 33.4 KMT – the smallest volume for the entire history of large-scale rape cultivation in the country. The season of 2013/14 began with brisker shipments. So, according to our information, 264 KMT of rapeseed went to foreign markets through the port of Constanta for the two months (July-August). This is nearly as much as in MY 2011/12, i.e. Romania can be expected to ship abroad roughly 0.5 MMT for the whole season.

Black Sea Vegoils & CIS Team: Julia Garkavenko, Anna Dmitrieva

For all questions, please contact us via tel. (044) 451-46-34 e-mail: agro@ukragroconsult.org periodicals@ukragroconsult.org

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