On September 18, 2013 the International Conference “Black Sea Oil Trade-2013: New Markets. New strategies” took place in Hyatt Regency, Kiev. The conference was organized by a Consulting agency “UkrAgroConsult”.

During the conference topical issues of Ukrainian and global oilseed market were discussed by 15 speakers from Ukraine, China, India, the UK, Turkey and Russia.

The conference attracted more than 140 participants from 22 countries and more than 110 companies. Among participants were oilseed and veg oils producers, traders, investment companies, banks, consulting, shipping, brokerage, insurance and surveying companies.

3 sessions of the conference analyzed prospects of global competition in the vegoil sector, its major players and their impact on the world market, pricing trends, trade in oilseeds and vegetable oils in the Black Sea region, oil processing, logistics and financing of oil and fat industry.

The 1st session “Global Competition on the Oilseed & Vegoil Markets – 2000-2015” was opened by Sergey Feofilov – Director General of UkrAgroConsult.

The main thesis of his speech - a period of high margin for oil extraction has finished.

Fat and oil industry has faced a shortage of raw materials, despite the projected record production of sunflower. At the beginning of the season 2013/2014, refining capacities are estimated at 14 million tons, while the sunflower crop will be 10.5 million tons.

With limited domestic market for sunflower oil, it is extremely important to develop new export markets and maintain the existing ones.

On the one hand, industry consolidation with the survival of the strongest is observed, while on the other hand – emergence and development of the "powerful" new competitor - Russia - is seen. These facts force the companies of oil and fat complex find and apply fundamentally new business development strategies.

Chairman of the Dalian Commodity Exchange, China  - Liu Xingqiang – described Chinese oilseed market and its effect on the global vegoil market pricing.

In his report, Mr. Xingqiang gave a detailed description of Chinese market of vegetable oils and its effect on vegetable oils pricing in the world. Liu Xingqiang pointed out the high volatility of prices on the domestic market, as well as a high level of correlation with world prices.

The presentation underlined that from 2001/02 to 2011/12 the increase in the supply of vegetable oils in China amounted to 113.5% or 7.9% per year. In 2012 MY oil imports amounted to 26.4% of the total reserves and the domestic production - 73.6%. During the same period, demand for vegetable oils has increased by 97.9% or 7.1% per year.

Liu Xingqiang has noted that in 2013 MY the supply of vegetable oils in China may reach 35 million tons.

Dalian Commodity Exchange has become the second largest futures market of agricultural products in the world.

Dr. Julian McGill – analyst of LMC International, the UK - characterized the EU biodiesel and GMO regulations policy and their impact on the European oilseeds market.

In his presentation, Dr. McGill addressed the issues relating to EU policy, as well as the general situation of oilseeds market in EU and Ukraine.

In recent years, the demand for vegetable oils in EU as a product for biofuels was satisfied by rapeseed oil. This has led to an increased demand for sunflower seeds in the market of edible oils. The main suppliers of sunflower oil to EU are Ukraine and Russia.

The speaker noted that the recent changes in EU policy regarding the regulation of applications  of crop for the production of renewable energy sources have questioned the continued growth of demand for these crops. At the same time, the negative attitude of consumers towards GM-crops promotes the separation of the market of edible oils.

Dr. Julian McGill is an economist in LMC International. He graduated from Oxford University with Ph.D. in economic history. Specializes in the research of oil markets.

The 2nd session of the conference “Black Sea region: Raw materials deficit vs record high crop” was opened by UkrAgroConsult analyst - Julia Garkavenko.

Presentation covered possible scenarios of development of Black Sea oilseed and vegoil and price outlook for the new marketing season.

In response to numerous questions from participants, it was noted that despite forecasted record sunflower crop crushers still face a shortage of raw materials. At the same time, after the period of high prices "enjoyment", sunflower producers try to stick to the policy of passive sales.

As for Ukrainian rapeseed market, producers, frustrated by lower prices in the previous season, are willing to export more after a slight increase in global rapeseed prices. For 2,5 months Ukraine exported about 1 million tons of rapeseed.

Soybean boom continues. There is a growing demand for soy both from the local crushers and exporters. Soy is a "growing" competitor to sunflower not only in Ukraine, but also in the whole Black Sea region.

Director General of "ProZerno", Vladimir Petrichenko, described scenarios of Russian oilseed and veg oil market development in the new season in the face of declining export restrictions.

The speaker noted that in 2012/13 season sun seed export from Russia was 10 times lower than in the previous season.  

In the 2012/13 season, the Russian market could be described as deficient in terms of raw materials. Sunflower stocks within Russian companies were exhausted much faster than usual, plants competed for large quantities of sunflower and as a result domestic prices remained at a high level. This prompted farmers to sell to the domestic market, rather than to seek foreign consumers. As a result, compared to the 2011/12 season, exports fell more than 10 times.

Prospects of oilseeds trade for Turkey, Romania and Bulgaria in the season 2013/14 were discussed  by Daniyar Aliahunov, Elita G?da San. ve Tic. A.S., Turkey

In his presentation, Mr. Daniyar Aliahunov shared a vision of the situation in the Turkish market of oilseeds and vegetable oils.

Sunflower crop in Turkey in the season 2013/14 is estimated to hit the record 1.5 million tones. That was helped by favorable weather conditions and an increase in sowing area.

He also said that in the medium- and long-term sunflower production will rise. State policy is aimed at reducing dependence on imported oil crops and increasing domestic production of oilseeds.

Mr. Aliahunov outlined the capacity of processing enterprises in Turkey, gave an estimate of capacity utilization, domestic consumption of vegetable oils and export potential.

In addition, his report included S&D balance of oilseeds in Bulgaria and Romania as major suppliers of raw materials into Turkey.

Dominique Menu, Director of the «BNP Paribas» in Ukraine, spoke about the prospects of financing Ukrainian oil and fat industry in the new season

In his presentation, Mr. Menu considered possible scenarios of food prices behavior, depending on decrease or increase in oil prices.

Ukraine is a country with a low rate of economy growth. In Ukraine price for oil, coal and corn remain at record levels. In the “Doing Business” ranking of the World Bank Ukraine occupies the 137th place.



The 3rd session “Investments in vegoil processing and export logistics” was opened by a speech of Mr. Ton Huls - Financial Director of "Allseeds".

Effeciency of export logistics of vegetable oils in Ukraine was discussed by Mr. Ton Huls - Financial Director of "Allseeds".

Speaker noted that complexity and efficiency of vegetable oils export logistics chain is especially important for Ukraine as a country that occupies a leading position in the world market of sunflower oil.

Mr. Huls described the main criteria for selecting a port as an export point, including technical characteristics and geographical position in terms of proximity to producing regions and processing facilities. Another important factor is a level of development of the system of internal transportation, including oil plants infrastructure and overall transportation system. “Allseeds” representative pointed out a steady demand for highly efficient sea terminals for vegoil transshipment in the face of changes in the structure of vegoils export trade.

Production of lecithin and phosphatidic concentrate in Russia was described by Georgiy Fedorov, Director of the Center of phosphatide concentrates producers support, South Oil Product, Russia

Vegetable phosphatide concentrate, also called raw lecithin, is a byproduct of refining vegetable oils from accompanying substances. Phosphatide concentrate differs from lecithin, mainly by its physical and chemical characteristics and technological properties.

Consumption of lecithin in Russia is the following: pastry - 41%, chocolate and chocolate products -36 %, margarine -22 %.

Report noted that economic crisis which started in late 2008, has led to a reduction in global production of non-GMO IP lecithin. Demand for lecithin continues to rise in Eastern Europe, Korea and the Pacific Rim countries.

At the moment Russia has an active development of soy lecithin production. In 2009 three production lines were launched - "Sodruzhestvo Soya", "Amuragrotsentr" and "Kubanagroprod". Production capacity of the new lines of lecithin make up more than 8,000 tons per year.

Introduction of such technology as water hydration of sunflower oil allows fat and oil processing companies to reduce losses and production costs of refined deodorized oils by $15-30. Aquatic hydration - is a path to a civilized sale of vegetable oils, which means a way to success.

Financial instruments and intensive cultivation technologies of oilseeds were described by Jean-Jacques Herve, Councellor to the board for agriculture, Credit Agricole Bank.

Representative of the “Credit Agricole Bank” Jean-Jacques Herve noted a need of further increase in production potential of Ukrainian market of oilseed products. Then Ukraine will be able to retain its status as a leader in vegoils export. The banker believes that in this case an important tool to develop agricultural sector is availability of borrowed funds. Credit Agricole Bank offers farmers different forms of cooperation: partnership and the guarantees of the bank, as well as loans.

Alex Morgun - Financial analyst of UkrAgroConsult discussed investment strategies, mergers and acquisitions in the oil extracting industry

Summing up the conference, Alex Morgun described the main trends of fat and oil industry of Ukraine and the world, underlined the major trends in the industry during the recent years. Strategies of the market leaders were reviewed and analyzed. Alex’s report included development forecasts of oil and fat sector, effective investment strategies for the business, as well as key mechanisms of  increasing companies' efficiency. Consolidation in the sector, its steady growth, increase in mergers and acquisitions, will be the basis for investment strategies for the 2013-2014 season. Vertical integration will include logistics component: increase in the number of new generation ports in the Black Sea region.

The goal of the “Black Sea Oil Trade-2013” conference – to find and discuss new strategies in the international and Ukrainian market of oilseeds and vegetable oils - has been achieved.

UkrAgroConsult