Will China become a threat to Ukraine's fat-and-oil sector in the context of the trade war with the USA?

12.07.2018

World markets of oilseeds and oilseed products are now pressured by the trade war between China and the USA. The only thing is clear: until the parties come to an agreement, all of the market players will have to adapt themselves and switch their strategies. How will this trend affect the Black Sea commodity markets? Will we witness an outflow of raw materials, which are so much needed by Ukraine’s fat-and-oil industry?

Attempting to win the trade war, China will use every possible way to minimize its soybean dependence.

The first question to arise is about sunflower seed as the main oilseed in Ukraine. Theoretically, Chinese importers will have to offer a very good price for encouraging Ukrainian traders to struggle with domestic crushers for the commodity, UkrAgroConsult’s analysts note.

Obviously, Brazil is becoming the country’s key partner in the current situation, even though it has driven up prices and widened the spread with US soybean price to USD 55-60/MT against USD 27-30/MT a year ago.

Meanwhile, it looks most likely now that the Chinese market will be opened to Ukrainian rapeseed. However, China will have to struggle here with such a traditional, reliable, relatively close buyer as the European Union. In view of reduced forecasts for Europe’s new rapeseed crop, China remains in a less advantageous position.

Full version of the article is available to subscribers for “Black Sea Vegoils” by UkrAgroConsult.

More detailed information on the latest trends in oilseeds/vegoils/meals exports, supply and demand balances with breakdown by crop as well as crop conditions and progress in planting/harvesting in the countries of Black Sea Region is available to subscribers for weekly market report "Online market review" by UkrAgroConsult.

Comments of Sergey Feofilov, General Director of UkrAgroConsult is available here:

 

 

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