Ukrainian corn: from raw material to processing

21.10.2016

Ukrainian corn: from raw material to processing

 

Estimates for sowing, production and processing of the crop. Analysis of trends in foreign and domestic demand and export corn prices.

 


The study “Ukrainian corn: from raw material to processing” contains essential data:  estimates for sowing, production and processing of the crop, as well as corn balances (exports, imports, consumption) in 2010 - 2017. It presents key characteristics of the corn production drivers and risks along with a SWOT analysis of the market.


A special focus is put on the analysis of trends in foreign and domestic demand and export corn prices.


The peculiarities of Ukraine’s grain logistics system are disclosed.


 


 

The study addresses the following key questions and issues:

  •  Corn or sunflower, comparative profitability of growing the competing crops.
  •  Promising end markets for Ukrainian corn. Export trends and geographical pattern. Top 10 exporters.
  •  Official data on plantings and production.
  •  Main drivers of foreign and domestic demand are identified.
  •  Corn processing for food, production and demand for corn groats and flour. Key producing companies.  
  •  Corn starch market, production and sale of starch-and-syrup products. Key producers.
  • General description and regional peculiarities of the grain storage system. Grain storage and handling capacities in ports.

     

The most important points in the latest update:

“Silos and Terminals of Ukraine” Main page study. UkrAgroConsult

 

Peculiarities of corn exports

Before 2009, wheat was Ukraine’s main crop shipped abroad. A significant expansion of corn plantings that began in 2008 changed the export structure. Now corn accounts for the bulk of grain exports (up to 60%). In the future, exports will be pushed up by further growth in global population and rising incomes in developing countries, which are the biggest consumers of Black Sea grain.

 

Corn export dynamics (MMT)

Corn export dynamics Ukraine

Source: State Statistics Service

 

Development of global demand for grain and meat as a driver of foreign demand

According to multi-year experience gained both in the world and in Ukraine, a rise in the consumption of quality animal foods by population shifts the country’s grain provision from its food part to the fodder component. Coarse grains, being the basis of animal production and compound feeds, in many respects shape the inter-sectoral proportions in agro-industrial production, determines the development of the entire grain market and are of high social and economic importance. This concerns both the whole country and its individual regions irrespective of whether they are growers or consumers of coarse grains.

Although the feed use accounts for the largest share in Ukraine’s domestic grain consumption, it is nevertheless smaller than in the EU, the USA, and Canada, where the portion of feed grains in total grain consumption equals 60%, 70, and 85%, respectively.
 

Impact of the livestock sector development on domestic demand for corn

The main corn consumer in Ukraine is now the livestock sector, including its poultry segment. Annual feed use of grain amounts to some 12 MMT. The main driver pushing up compound feed production capacities in 2003 - 2013 was strengthening demand from animal raisers. A reversal of this trend was observed in the 2015/16 season due to deterioration of the wheat quality along with a corn crop decrease.

 

compound feed production Ukraine

Source: State Statistics Service
 

Correlation of domestic and export corn prices

The regulation of corn prices in Ukraine, particularly FOB prices, in many respects depends on global price movements and to a lesser degree on any internal factors. Ukrainian corn is most competitive early in the season (in the harvest and post-harvest periods).


 

Relevance of the subject:

This study analyzes a cereal crop such as corn throughout the entire chain from its sowing to production and export. A lot of attention is paid to the trends in foreign and domestic demand for corn, as well as to peculiarities of its pricing in both domestic and export markets. In addition, the grain logistics system is presented in a wide context.

Corn planted areas in Ukraine steadily expanded until 2014. The only exception was 2009. In the following years, farmers remained constantly interested in corn due to its stable high margins. This brought about the expansion of plantings. Ukrainian corn producers mostly observe proper growing practices.

Before 2014, corn yield continuously rose in view of mostly favorable weather conditions. In addition, persistent consolidation and reshuffle of market players resulted in the emergence of major agricultural producers, i.e. agriholdings with a strong financial component and an intensive approach to corn cultivation.

In the condition of stable domestic grain consumption in Ukraine, export volumes depend mostly on the harvest. Wheat was Ukraine’s main export crop before 2009. A significant increase in the corn planted acreage that started in 2008 changed the export structure. Corn currently accounts for the bulk of grain exports. Traditionally, the top buyers of corn included North Africa, Europe, and the Near East. However, in recent years, grain is actively supplied to promising markets such as South-East Asian countries.

The fairly good quality combined with a low price has made Ukrainian grain more competitive in the world market. In the future, it will remain highly competitive due to lower production costs than in other countries.

Ukraine as a grain grower is located quite close to the world’s key consumers (countries of the Near East and North Africa), therefore it has a competitive advantage because of relatively low cost of grain delivery to the destination markets.


 

Contents:

1. Estimates for corn planting and production

  • 1.1. Official data on corn plantings and production
    Corn plantings
    Corn production
  • 1.2. Comparative profitability of growing corn and competing crops.
    Profitability of corn growing
    Profitability of sunflower growing

2. Trends in foreign and domestic demand for corn

  • 2.1. Export trends and geographical pattern
    Grain exports from Ukraine
    Grain export pattern
    Corn export trends
    Corn export destinations
    Top 10 corn exporters
  • 2.2. Promising end markets for Ukrainian corn
    Estimated corn imports by Ukraine’s major buyers
    EU. Share of key corn suppliers
    Egypt. Share of key corn suppliers
    China. Share of key corn suppliers
    Israel. Share of key corn suppliers
    Tunisia. Share of key corn suppliers
  • 2.3. Development of global demand for grain and meat as a driver of foreign demand
    Global meat production
  • 2.4. Development prospects of the livestock sector as a driver of domestic demand
    Compound feed production
    Cattle, hog, and poultry inventories
    Pattern of feed use of corn
  • 2.5. Corn processing for food uses. Production and demand for corn groats and flour
    Ukraine: Regional production of corn groats
    Ukraine: Corn groats production trends
    Ukraine: Regional pattern of corn groats production
    Ukraine: Top 15 corn groats producers
    Ukraine: Corn groats exports
    Ukraine: Export destinations of corn groats
    Ukraine: Regional production of corn flour
    Ukraine: Corn flour production trends
    Ukraine: Top 10 corn flour producers
    Ukraine: Corn flour exports
  • 2.6. Industrial use of corn. Production and sale of starch-and-syrup products
    Corn starch production
    Starch exports by type
    Corn starch exports

3. Corn supply and demand balance

4. Grain logistics system

  • 4.1. Grain storage system. General description and regional peculiarities
  • 4.2. Grain storage and handling capacities in ports
     Ukraine. Port capacities for handling export grain
    Actual grain handling (exports + transits) in Ukrainian ports
    Ukraine. Monthly grain shipments via sea ports
    Ukraine. Grain exports via sea ports

5. Behavior of domestic and export prices for corn

6. Drivers and risks in silage corn production

7. SWOT-analysis of the corn market


 

Conclusion:

The increase in global population and growing incomes in developing countries, which are the top consumers of Black Sea grain, will drive the rise in exports. Subsidiaries of international trading companies along with Ukrainian agriholdings are the biggest players in the corn export market.

Over recent years, Ukraine has expanded its share in the world corn market and become a major grain supplier. Apart from being the main source of corn for EU countries, Ukraine enlarges its footprint in the Near East and North Africa too. Ukrainian grain enjoys strong demand from South-East Asia (Philippines, Indonesia etc.), where the consumption level is to keep climbing up.

The expansion of production and trading capabilities in Ukraine may prompt the introduction of new farming practices to further boost grain output. The concentration of production capacities may create prerequisites for investment and the development of grain market infrastructure.
 

 

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