OIL FOR WORLD –Report on the IV International Conference “Black Sea Oil Trade-2016”

14.09.2016

Topical issues of oilseed market and products of deep processing of oil crops in particular were discussed by industry experts and delegates within the IV International Conference "Black Sea Oil Trade-2016". The conference was held by Consulting agency "UkrAgroConsult" on September 7, 2016 in Hilton hotel, Kiev, Ukraine. More than 200 participants from over 150 companies and 24 countries attended the event.

Search for new development strategies of oil&fat complex and promotion of its products on the world market was the main focus of the conference. Lively disputes were sparked off by presentations dedicated to new information technologies in fat and oil sector marketing. Speakers also drew attention to the products of deep processing of oil crops, particularly to lecithin, as a source of significant increase in producers’ profit margin.

 

IV International Conference “Black Sea Oil Trade-2016”

 

WIDER THAN USUAL

Speech of Sergey Feofilov, Director General, UkrAgroConsult, set the tone of the discussion, providing its geographical (beyond the Black Sea region) and topical overflow (production-consumption sector).

The speaker stressed out changing environment for world economy in recent years, noting that increase in global debt, reduction in GDP growth, dominance of financial systems over the real economy, are the evidence of a systemic crisis or even consumer society collapse.

As informed by S.Feofilov, rising production of oilseeds in Ukraine should not be considered as a definitely positive factor. Joy from the fact that Ukrainian sunflower acreage almost equals wheat planted area for the first time over the past 15 years may be soon marred by an industry crisis, triggered by increased competition and toughening crop rotation regime. This may further result in a considerable reduction in planted areas under sunflower.

The speaker believes that market positioning of sunflower oil as a premium product can become the main source of long-term revenue stabilization of sun seed market operators in Ukraine (instead of expanding crop production). The market needs some kind of "information attack" aimed at promoting advantages of sun oil compared to other vegetable oils (GMO-free, high vitamin E content,etc.). This would raise market interest to the product and trigger price growth, as it was noted in case of other products (let's recall the olive oil health claim).

Feofilov Sergey

A global outlook for sun seed and sun oil sector was made by Joseph Feyertag (LMC International, UK). Analyzing factors which influenced palm oil market, the speaker emphasized their direct dependence on crude oil prices, as crude palm oil is the most advantageous raw material for biodiesel production. According to statistics provided by the expert, in 2000 biofuel's share in the petroleum products market was only 1%, while in 2015 this figure reached 17%. Consequently, reduction of BRENT crude oil prices automatically leads to similar reaction in the palm oil market. According to Mr. Feyertag, this trend promotes an increase in sunflower oil competitive power on the world markets.

Marcos Rubin (Agroconsult, Brazil) informed in his speech about slowing expansion of soybean planted area in Latin America. He noted that currently Brazilian farmers still keep increasing the acreage, however this process would slow down in the near future. According to the speaker, in season 2015/16 the area was expanded by 4% (farmers preferred sowing soybean instead of corn or cotton), while in 2016/17 acreage will be expanded by only 1%. The same trend is observed in soybean production – in 2014/15 and 2015/16 soybean production in Brazil reached 97.2 MMT. In the 2016/17 it is expected to grow slightly to 102.5 MMT. Certainly, El Nino and La Nina have a significant impact on soybean production in South America, as they determine the degree of soil drought in a given year. The Speaker suggested that sunflower producers in Latin America should pay close attention to the trend of slowing soybean production growth.

A strong interest of South and Southeast Asia in sun seed imports was noted in a presentation of Sumit Gupta (McDonald Pelz, India). Commitment of majority of the region’s population to vegetarian cuisine is the main driver for this interest growth, believes the speaker. "India will always import sunflower oil, as we consume mostly vegetable rather than animal proteins", - said Mr. Gupta. The speaker provided statistics, according to which, in recent years sunflower seed imports to the Southeast Asian region have increased from 2.5 MMT to 7 MMT per year, meanwhile to China – by almost 300%.

International Conference Black Sea Oil Trade

 

CREATE VALUES

Sergey Feofilov called for value creation, emphasizing the role of deep processed oilseed products in ensuring producers' profit margins growth. Lecithin is one of such products, and Jens Heiser (LECICO, Germany) presented an overview of its production and consumption globally.

The speaker described all stages of liquid lecithin production, which is a byproduct of vegetable oils refining by means of hydration. According to Mr.Heiser, lecithin acts as an emulsifier and is used in food and chemical industries, as well as in medicine – as an active substance of hepatoprotector preventing liver diseases.

According to the speaker, the global demand for lecithin stands at around 400 KMT per year (in Europe and North America – 100 KMT each, Asia – 150 KMT, South America – 50 KMT). In 2016 soya lecithin was dominant on the world market (300 KMT were produced from GM soy and 50 KMT of non-GM soy), sunflower lecithin (30 KMT) and rapeseed lecithin (20 KMT). Jens Heiser noted that in Ukraine lecithin is produced from non-GM raw materials, which is a great advantage and local operators should take a chance to become leading suppliers of non-GM lecithin to the global market.

Elena Fedorova, (PROTEIN PLUS, Russia) examined the features of Russian lecithin market. Elena estimated lecithin imports to Russia at 5,128 KMT in 2015, exports – 4,390 KMT, while total production stood at 9 KMT; potential market capacity is estimated at 25-30 KMT. Russian share in the global lecithin market reaches 5%. The speaker also noted that 26% of imported lecithin was supplied from Ukraine.

As informed by the speaker, Russia produces liquid standardized lecithin, bleached and unbleached lecithin, as well as technologically functional composites based on lecithins (for instance, lecithins, deposited on whey powder or powdered skim milk, mixtures of monoglycerides and lecithin, etc.). Other defatted lecithins with oil content of 3.2% - powdered and granulated; enzymatically or chemically modified lecithins – hydrolyzed, hydrogenated, acetylated; and individual phospholipid fractions are only in plans so far.

Attention of the conference delegates was also drawn to estimated and actual oilseeds production in Ukraine, provided in the speech of Julia Garkavenko (Oilseed market expert, UkrAgroConsult, Ukraine). Analyzing April estimates and current oilseeds harvest in Ukraine in 2016, the expert noted that UkrAgroConsult's forecasts generally made true – rapeseed production is to reach 1.2 MMT (April estimates – at 1.2-1.5 MMT), soybean - 4.3 MMT (estimate – 4.4-4.8 MMT), sunflower seed – 14 MMT (12-15 MMT). The speaker noted that among the reasons of soybean acreage reduction was farmers' increased interest in sunflower cultivation.

Prospects of grains\oilseeds river logistics as an absolutely new value in contemporary Ukraine, were presented by Mikhail Yegorov (Hermes-Trading, Ukraine). The company owns a river elevator in Svetlovodsk (Kirovograd region) with  an annual capacity of 0.5 MMT per year. For Ukraine, however, river logistics is a well-forgotten past, as in 1990 about 66 MMT of cargo were transported via the Dnieper river, while current shipments equal about 7 MMT. The speaker believes that by 2020 this volume can be improved to reach 15 MMT. At the moment about 1.7 MMT of grains and oilseeds are shipped by the river.

As for the sun oil river logistics, it would be possible to achieve with the tanker fleet, which is currently absent in Ukraine. M.Egorov suggested that vessels of 2-5 KMT tonnage could be a good solution for the shipments. It would be also cheaper to transport the cargo by river rather than by rail or road.

International Conference “Black Sea Oil Trade”

“Black Sea Oil Trade" conference provided a great opportunity for international agri business operators to discuss the results of 2015/16 and prospects of 2016/17 season, exchange various business contacts and strengthen international cooperation. Over 200 delegates from 24 countries attended the event.

Organizer of the conference -  Consulting Agency “UkrAgroConsult". Sponsors - Allseeds group, GEA Wastfalia Separator Group.

 

 

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