Business news from Ukraine

Ukrainian corn started to rise in price on world markets due to growing demand for it from China, Turkey, Egypt and EU

Contrary to forecasts, Ukrainian corn has started to rise in price on world markets due to increased demand from China, Turkey, Egypt and the European Union, according to the analytical cooperative “Pusk”, created within the framework of the All-Ukrainian Agrarian Council (AAC).

“The expectations of the trade that with the arrival of a new corn crop from Argentina on the world market, demand and prices for Ukrainian grain would fall, did not materialize. Argentine new crop is sold at higher prices than Ukrainian corn. We can predict a rise in prices for corn from Ukraine in the coming weeks,” the analysts said.

According to them, China is actively contracting Ukrainian corn. Other importers, such as Turkey, Egypt, Italy, and Spain, have also started buying a lot of Ukrainian corn. In seaports, the conditional prices for it have risen to $142-145/ton and have been increasing for a week and a half. The supply is sinking, while demand is stable.

“It can be predicted that amid demand, prices will add $2-3 per tonne per week and reach at least $150/tonne on a CPT basis by the end of March,” the experts emphasized.

They said that in April, the main factor of corn price changes will be the information on the grain harvest in Brazil. In April, there will be more reliable information about the harvest in Brazil: the planted areas, soil moisture, and crop condition. This will affect the global market. If the drought continues in Brazil and the harvest is reduced, the price will rise. But for now, this is one of the scenarios. In case of rainfall in Brazil, the situation on the global corn market will be different.

On a DAP basis, Ukrainian corn is traded for delivery in March-April to Italy, Austria and Germany in the range of $192-197/ton, Pusk summarized.

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IMC is considering two projects to develop corn processing and plans to increase production

In 2024, IMC Agro Holding intends to expand corn crops and return to pre-war agricultural technology, and is also studying two projects to develop processing, the decision on which will be made in May-June, said Alex Lissitsa, SEO of the agricultural holding, at the Forbes Agrifood conference.

“During the two years of war, we have come a long way. We had 120 thousand hectares and 6 elevators. 100 thousand hectares and 5 elevators were under occupation. As a result of the de-occupation, we managed to enter our territory. However, some facilities were destroyed,” he said.

According to him, the new large dairy farm of the agricultural holding, located on the border with Belarus, had to be closed due to the poor condition of the cows after the occupation, as well as the almost completely destroyed logistics infrastructure around Chernihiv, where all bridges were destroyed.

In the first year, 30 thousand hectares of the agricultural holding’s land were in the war zone and were partially mined. The second year of the war was a stage of rethinking for IMC, and in the third year they managed to reach more or less the planned indicators, explained the SEO of the agricultural holding.

According to him, in 2022, IMC was unable to sow its land and grew mainly wheat. In 2024, the agroholding will return to traditional technological maps and expand the area under corn, as in 2023 it managed to get a record harvest of 20 tons per hectare. IMC was able to achieve such results thanks to favorable weather conditions that offset the problem of fertilizer and pesticide shortages. In addition, the agroholding has the necessary capacity to store corn.

Mr. Lissitsa also noted that IMC refused to cooperate with international traders who behaved incorrectly towards most Ukrainian customers. Currently, IMC prefers to cooperate with the domestic grain trader Nibulon, through which it sells about 70% of its products. IMC has also found new suppliers of sunflower seeds – Ukrainian regional companies in Chernihiv region.

“We used to build relationships with large foreign traders, and now we are establishing partnerships with those we have not communicated with before. We were beautiful, fashionable, and it was not very fun to work with them. And now we realized that we are basically still beautiful, but not so fashionable. And we need to work with local businesses. They offered us a helping hand and we started working again. Now we are really rethinking. Many contracts with international traders are still in court. I don’t know when they will end. Huge amounts of money are stuck there. It is really easier for us to drive up to our neighbors, negotiate and shake hands,” stated the IMC SEO.

Lissitsa also said that most agricultural holdings have not invested in machinery over the past two years, but have been living off the purchase of spare parts, and thus most of the agricultural machinery has been produced.

At the same time, the IMC is considering two processing projects in parallel – one with the EBRD and the other with the IFC.

“I can’t tell you yet, but we are looking at these projects very, very closely and will make a decision in May-June this year,” Lissitsa said.

The agroholding’s SEO emphasized that IMC has no problems with financing and has established partnerships with a number of banking institutions.

“Last year, we were probably one of the first in the agricultural sector to receive a new loan from the EBRD during the war. Raiffeisen financed us for the purchase of machinery. Credit Agricole is now adding more,” Lissitsa summarized and advised farmers to establish transparent relations with banks and be ready to provide them with all the information to get financing for new projects.

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On world markets, Ukrainian corn is sold cheaper than American and Argentine corn by $20/ton

Ukrainian corn is sold cheaper than American and Argentine corn by $20/ton on world markets, which is an abnormal distortion and leads to the restraint of sales by Ukrainian farmers, according to the analytical cooperative “Start”, created within the framework of the All-Ukrainian Agrarian Council (AAC).

“Ukraine actively trades corn, significant volumes have already been contracted in January-February. Market operators fear that the supply of corn from Argentina will increase on the world market and the conditions for the sale of Ukrainian grain will deteriorate,” analysts said, adding that prices on CIF terms have fallen sharply, as the supply of Ukrainian corn is high and the demand for it is low.

According to the experts, Ukrainian corn is traded conditionally at $200-210/ton on the European markets, while corn originating from the USA is traded at $220/ton.

“The gap of $20/ton is abnormally large. Ukrainian corn is too cheap on the world markets compared to its American and Argentine counterparts, and there are no objective reasons for such an imbalance,” the UAC believes.

At the same time, the CPT market is not yet active in terms of trade, many farmers are holding back corn and do not want to sell it at low prices. In Odesa ports, CPT prices are in the range of $147-155/ton, and in small ports on the Danube – $150-155/ton.

Large market players have paused in corn trading, while small and medium-sized traders are active on the market. As prices on CPT terms are so low that they make corn trading unprofitable for the average farmer, many farmers are ready to postpone corn sales until summer or even postpone them to the next season. And although Ukraine has significant corn stocks – about 17 million tons – the amount available for sale is an open question, the UAC summarized.

IMC completes corn harvesting with record yield of 12.4 tons/ha

IMC Agro Holding has completed the harvesting of corn in 2023 and achieved a record yield of 12.4 tons/ha, which is 1.3 tons/ha higher than the previous record set in 2018, said Alex Lissitsa, SEO of the agricultural holding.

“A total of 574 thousand tons were harvested from an area of 46.3 thousand hectares, with an average corn yield of 12.4 tons/ha, a record for all years of the company’s operations, which is 1.3 tons/ha higher than the previous record set in 2018,” he wrote on Facebook.

IMC is an integrated group of companies operating in Sumy, Poltava and Chernihiv regions (north and center of Ukraine). It controls 120.3 thousand hectares (120.0 thousand hectares under cultivation). As of September 30, 2023, the group operated in two segments: crop production and elevators and warehouses.

The agroholding’s net loss in 2022 amounted to $1.1 million against a net profit of $78.7 million a year earlier, with a 37.3% decrease in revenue to $114 million. EBITDA decreased threefold to $36.2 mln.

For the 2024 harvest, IMC sowed winter wheat on 20.3 thou hectares.

In the first nine months of 2023, IMC posted a net loss of $2.25 million, compared to $4.67 million in net profit for the same period in 2022. The agroholding’s revenue increased by 59.8% to $98.78 million, including exports, which increased by 24.4% to $70.23 million. A significant increase in production costs – by 55.6% to $92.4 million – led to a decrease in gross profit by 33.3% to $29.89 million. EBITDA in the first nine months of 2023 amounted to $13.85 million, which is 2.7 times less than in the first nine months of 2022. The report notes that the reason for the decline was the decline in harvest prices in 2023.

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Spain is interested in importing Ukrainian corn and sunflower

Spain is ready to promote Ukrainian agricultural exports and is interested in importing Ukrainian agricultural products, in particular corn and sunflower, Spanish Minister of Agriculture, Fisheries and Food Luis Planas Puigades said at an online meeting with Ukrainian Minister of Agrarian Policy and Food Mykola Solsky on Monday.

According to the press service of the Ministry of Agrarian Policy, during the online meeting, the parties discussed the export of Ukrainian agricultural products and food security. In particular, the extension of Ukraine’s duty-free and quota-free trade regime with the European Union.

“Spain fully supports Ukraine in the face of Russia’s unprecedented and illegal aggression. This includes both military and humanitarian assistance. The Spanish Minister of Agriculture emphasized that support for Ukraine also means promoting Ukrainian exports, which is a key factor for the economy to continue to function,” the Ministry of Agriculture said, adding that Spain is interested in importing Ukrainian agricultural products, in particular corn and sunflower.

“I reaffirmed Spain’s support for the continuation of trade measures to support Ukraine during a video conference with the Minister of Agrarian Policy and Food of Ukraine. Ukrainian farmers have managed to maintain production despite the difficulties,” Puigadez wrote on the social network X after the talks.

For his part, Solsky thanked his Spanish colleague for his understanding and support.

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Agrotrade’s corn yield exceeded 131% of target

Agrotrade has harvested 73% of its corn acreage and continues threshing it in Chernihiv region, the company’s press service reported on Facebook.

According to the report, the corn yield in Chernihiv region reaches 12 tons per hectare. High corn yields were also recorded in other regions of the agricultural holding’s operations. On average, they yielded 131% of the planned yield.

“High yields and good grain quality were ensured by the correct selection of varieties, an effective fertilizer system and successful insecticide protection. Before commercial sowing, hybrids are pre-tested on the demo fields of the company’s testing centers. This allows us to utilize the highest yield potential,” explained Oleksandr Ovsyanyk, Director of Agrotrade’s Agricultural Department.

The agroholding reminded that in 2023, more than 8.3 thou hectares were allocated for corn in Chernihiv, Sumy and Kharkiv regions. The harvesting of the crop has already been fully completed in Kharkiv region. The highest yield of more than 14 tons/ha was obtained in the frontline area of Sumy region, where the agricultural holding’s employees continue to work under regular shelling.

As reported, in 2023, Agrotrade exported about 350 thousand tons of grain, of which 35%, or 116 thousand tons, was the share of its own products, and 65%, or 230 thousand tons, was from third-party producers.

The Agrotrade Group is a vertically integrated holding company with a full agro-industrial cycle (production, processing, storage and trade of agricultural products). It cultivates over 70 thousand hectares of land in Chernihiv, Sumy, Poltava and Kharkiv regions. Its main crops are sunflower, corn, winter wheat, soybeans and rapeseed. It has its own network of elevators with a simultaneous storage capacity of 570 thousand tons.

The group also produces hybrid seeds of corn and sunflower, barley, and winter wheat. In 2014, a seed plant with a capacity of 20 thousand tons of seeds per year was built on the basis of Kolos seed farm (Kharkiv region). In 2018, Agrotrade launched its own brand Agroseeds on the market.

Vsevolod Kozhemiako is the founder and CEO of Agrotrade.

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