Agrosem LLC (Kyiv), a distributor of agricultural products, seeds and agricultural machinery, has launched a railway route from Ukraine to Austria, which will export batches of Ukrainian corn on a weekly basis.
Agrosem’s Facebook page reported on Tuesday that the first train of 25 hopper cars arrived at the Austrian customer on May 6. Based on the average carrying capacity of grain wagons of 72 tons, the volume of a weekly consignment of corn sent to Austria will be approximately 1.8 thousand tons.
“Customers in Ukraine and Austria are happy with the result, but the process was complicated, especially due to the difference between the width of the tracks in Ukraine and Europe. This required finding stations where it would be possible to transfer from the Ukrainian train to the Austrian one, and it was also necessary to find out the availability free wagons in both countries. But we are confident that the train will run weekly, delivering products to Europe,” the company explains.
According to the director of “Agrosem” Oleksiy Kulik, whose words are quoted by the press service of the company, it is now very important to support Ukrainian farmers and find solutions for the export of grown products. “We must do everything to ensure that Ukrainian farmers can sell their products in Europe at market prices,” he stressed.
Ukrainian Ambassador to Austria Vasyl Khyminets, Minister of Agriculture, Forestry, Ecology and Water Resources of Austria Elisabeth Kostinger, General Director of the Austrian Federal Railways Andreas Matt and Director of Agrosem Kulik participated in the organization of the export route.
“Agrosem” is the official distributor in Ukraine of agricultural machinery and spare parts, seeds, fertilizers and plant protection products. The company offers solutions in the field of precision farming, telematics systems, automated and unmanned vehicles aimed at improving product efficiency and saving resources in the agricultural production process.
According to the Unified State Register of Legal Entities and Individual Entrepreneurs, the ultimate beneficiary of Agrosem LLC is Oleg Zvyagintsev with a 35% stake in the company’s authorized capital, Igor Zvyagintsev (15%), Alexei Kulik (15%) and US citizen Alexander Weiner (35%).
The first cargo of Ukrainian corn weighing 71,000 tons since the beginning of the Russian military invasion of Ukraine went on a P-class vessel to the recipient from the Black Sea port of Constanta (Romania), the Reuters website reported on Friday.
According to him, this port has already received about 80 thousand tons of Ukrainian grain, and the same number is on the way to it.
As Ukraine’s seaports were blocked following Russia’s aggressor country’s invasion of Ukraine in February, the world’s fourth-largest grain exporter has been forced to ship to Romania by train across its western border or through its small river ports on the Danube River.
“Supporting the export of Ukrainian grain means preventing a colossal wave of world hunger provoked by the blockade of Ukrainian ports. Compared to the initial moment, when everyone was looking for alternative transport corridors for grain exports, they are gradually being formed,” Viorel Panaita, president of Comvex port operator, who organized deliveries of a batch of Ukrainian corn.
According to Comvex, the seaport of Constanta owns the fastest-loading grain terminal in Europe, capable of handling up to 70,000 tons of crops per day.
As reported, Ukrainian and Romanian ministries at the end of March began negotiations on the export of agricultural products from Ukraine through European seaports, including the Romanian port of Constanta.
Ukraine has tens of millions of tons of agricultural products in warehouses, but due to a naval blockade by the aggressor country, the Russian Federation cannot supply it to its traditional markets.
The countries bordering Ukraine have responded to its problem with the export of agricultural products, and have already significantly simplified the procedures for registering freight traffic or are actively working on it. In particular, Romania, Slovakia, Hungary, Lithuania, Latvia, Estonia, as well as Italy, Turkey, Bulgaria, Georgia, Denmark, Greece, Austria introduced liberal conditions for Ukrainian carriers.
Before the Russian military invasion, Ukraine monthly exported about 5 million tons of agricultural products through the ports of Odessa and Nikolaev, but now, due to their naval blockade by the Russian Federation, it can transport about 500 thousand tons of grain monthly. This leads to a monthly shortfall of about $1.5 billion in export earnings for the country.
The Ukrainian Grain Association (UGA) has agreed to limit the export of corn in the 2020/2021 MY to 24 million tonnes by the end of June in the grain memorandum, since given the association’s export forecasts and the practice of such memorandums, the practical implementation of such a limitation is unlikely.
“The introduction of the maximum corn export volume in the memorandum between the Ministry of Economy and business associations representing participants in the grain market is rather a symbolic step to ensure predictability and tranquility in the grain market,” the UGA said on its website.
The association emphasized the absence of grounds for statements about the likelihood of a shortage of corn on the Ukrainian market. According to its estimates and official statistics, with a harvest of this MY of about 30 million tonnes and internal needs of about 5 million tonnes, exports by mid-January amounted to about 10 million tonnes, of which 2 million tonnes was corn from the previous MY. The UGA also recalled that this year corn exports in mid-January lagged behind last year by almost 3.5 million tonnes.
The association predicts that in the future the rate of export will decrease, as Ukraine has already passed the peak period of export of this crop. The UGA also believes that high prices for corn and benchmarks for its export will give producers a positive signal to expand the area under this crop in 2021.
In addition, the UGA notes that for all the years of the memorandums and the similar restrictions contained in them with respect to wheat, they have never been applied in practice.
The Ministry of Economy and grain market participants have agreed on a maximum corn export volume for the 2020/2021 marketing year (MY) in the amount of 24 million tonnes and will amend the annex to the memorandum of understanding between the grain market participants, the ministry said in a statement following a meeting held on January 25.
“Now, according to the regions, the projected corn production is 30.3 million tonnes, which is one of the best corn yields in all years. The Ministry of Economy believes that there are no problems with exporting corn to foreign markets or a probable shortage of this crop in the domestic market,” Economy Minister Ihor Petrashko said.
The report indicates that, if necessary, the parties agreed to revise the approved maximum amount of corn allowed for export, after the publication of official statistics on crop production in 2020.
As reported, the associations of poultry and livestock breeders initiated the restriction of corn exports at the level of 22 million tonnes in 2020/2021 MY in the “grain” memorandum. They argue their proposal to limit exports by the need to guarantee the domestic market 7.5 million tonnes of corn for production of animal feed.
The Ukrainian Grain Association considers the volume of corn exports at the level of 24 million tonnes acceptable for the market participants and corresponding to their forecasts of the harvest of this crop, acting executive director of the association Serhiy Ivaschenko told Interfax-Ukraine. Earlier, the association opposed the restriction of corn exports at the level of 22 million tonnes, since, in its opinion, the real goal of the initiators of the restrictions was to create an artificial surplus in the domestic grain market to reduce prices.
One of the members of the American Chamber of Commerce told Interfax-Ukraine that the association discussed the possibility of limiting corn exports before making a final decision and agreed that there was no urgent need for it, but if such a limitation is introduced, then it should be set at the level of 24 million tonnes, but not 22 million tonnes as suggested by its initiators.
The Ukrainian Agribusiness Club (UCAB) has revised downward the forecast for the corn harvest this year from 32 million tonnes to 29.4-29.5 million tonnes under the optimistic scenario due to unfavorable weather conditions during July-August, and also taking into account the situation with harvesting in September and October in a number of regions of Ukraine.
According to a message from UCAB on Wednesday on Facebook, about 13 million tonnes of corn have already been harvested with an average yield of 5.18 tonnes per ha, in some regions corn has already been harvested from more than 50% of the sown area.
“Usually, farmers start harvesting first from less productive fields, so there is some hope, as well as statistical confirmation from the example of last year, when at the end of the harvest, the yield increases slightly. By the end of field work, according to optimistic forecasts, an average yield of 5.75 tonnes per ha is expected,” UCAB said.
According to the Ukrainian Agribusiness Club, unfavorable conditions have developed almost throughout the entire territory of Ukraine, however, the greatest reduction in the expected yield occurred in Cherkasy, Vinnytsia, Poltava, Kirovohrad and a number of southern regions. As a result of dry conditions and a lack of moisture in the soil, premature drying and maturation of plants is observed. During field surveys, insufficient fullness and relatively small sizes of corn ears are often detected.
UCAB’s expectations for the sunflower harvest have been reduced to 12.2 million tonnes from the forecast of 13.6 million tonnes in early September. According to calculations, the average yield is 2.2 tonnes per ha. The largest decline was due to the southern regions, where the production of this oilseed is focused, as well as the central ones.
According to UCAB, soybeans also suffered significantly from unfavorable conditions, so its gross yield is expected to be only 2.7 million tonnes, which is 30% less than last year. This significant decrease occurred, among other things, due to a decrease in the area under crops from 1.6 to 1.3 million hectares.
The analytical agency UkrAgroConsult predicts a wheat harvest of 25.9 million tonnes for 2020 with exports of 17.5 million tonnes and a corn harvest of 36 million tonnes with exports of 29 million tonnes.
“The assessment of export potential for wheat is quite consolidated – 17.5 million tonnes, this figure is fixed in a memorandum, an appendix to which has been recently signed. In any case, exports will be about 3 million tonnes lower than last year,” the UkrAgroConsult export for the grain market, Yelyzaveta Malyshko, said during the Black Sea Grain & Oil Trade 2020 international conference in Kyiv.
According to her, the start of the wheat export season was impressive, for example, from July 1 to August 28, some 4.16 million tonnes of wheat were exported, which is the highest figure for this period in the previous years.
“Now active export contributes to the fact that domestic prices for wheat in September are about $ 30 higher than last year and the demand remains. Expectations in this regard are quite optimistic. Forwards for December are now showing $ 225, but we cannot exclude autumn price deflection after the arrival of Canadian and then Australian wheat crop,” the expert said.
UkrAgroConsult’s estimate of the corn harvest for this year is 36 million tonnes.
The expert noted price expectations for corn are optimistic, however, a decrease in prices during the period of active harvesting cannot be ruled out.
