June 23, 17:02 Source: APK-Inform Views: 1145

Future belongs to soybean processing — experts

Experts forecast that in 2017/18 MY Ukraine will process the record volumes of soybeans in comparison with the previous season, due to the processing capacity increase and better sales activity of soybean by-products.

Soybean processors shared their opinions towards the high results in the sphere, the market tendencies and forecasts for the future season.


We asked the processors several questions:

1. According to estimations of APK-Inform Agency, in September-April of 2017/18 MY the volume of soybean processing hit the record volume that totaled 846 thsd tonnes, up 9.4% year-on-year. How do You think what did affect the increase of the processing activity in the first half of the season?

2. In the current season, the market of soybean products faces the upside-down trend in comparison with the previous MY. The soybean oil demand rates and the prices are low, whereas for soybean meal are high. What are the main factors that influence the price formation for the products?

3. The strong processing of soybeans in Ukraine prompted the exports of soybean meal and oil to the record high. Would You please tell what countries did increase the imports of soybean by-products, and what stop buying the Ukrainian products? What are the reasons in particular in terms of Your company?

4. What changes do You expect in terms of the Ukrainian soybean processing industry after the soybean exports VAT refund cancellation, since September 1, 2018? Thus, in Your opinion, would the multi-crops processing companies reorient towards soybean processing from sunflower?

5. How would the trade conflict between the USA and China, and significant crop losses in Argentina, influence the Ukrainian market of soybeans?



Ostap Palchevsky, Deputy Director for commercial activity of oilseeds and by-products at Agri-Industrial Holding Astarta-Kyiv

1. The increase of the soybean processing in 2017/18 MY was favored by the rise of the processing capacities. First, it should be noted, that the drought in Argentina led to the increase of the marginality of the soybean processing in Ukraine. In particular, since April there is the rise of the processing margin because of the soybean meal prices escalation by the 100 USD/t. Thus, during April-May of 2018 there was a considerable growth of the processing of soybeans.

2. If we speak about the soybean oil market, here we should keep in view the trends on the market of palm oil, which is a main driver of the vegetable oils market. Since the beginning of the current year, the prices of palm oil are at the two-year low level that cannot but influence the price formation on the markets of soybean and sunflower oils in particular. In the current season the rise of the prices of Ukrainian soybean meal were stimulated by the drought in Argentina where the production of soy decline by more than 15 mln tonnes.

3. The EU has remarkably increased the import of soybean meal from Ukraine. Among others, there were first exports of non-GMO soybean meal from Ukraine. Our company successfully exports soybean meal onto the European markets second season in a row. It should be noted, that in general the EU imports approximately 20 mln tonnes of meal, which is 50% of their total consumption volume. Thus, the European market is open for us and we have place to develop. Moreover, it worth noting, that Republic of Belarus had renewed the import of Ukrainian soybean meal due to the ASF found in the country. Also, in the current season Republic of Belarus bought the Argentinian meal by higher prices than the one from Ukraine, which is geographically closer.

Hydrated soybean oil from Ukraine is exported primarily to China.

4. According to the law of the soybean exports VAT non-refund we can assume that there is an increase of the processing level on both the existing and new enterprises. It is expected that the multiprocessing companies oriented on the other oilseeds processing will show the interest to the processing of soybeans. The market of consumption of soybean meal in the countries-potential-buyers of Ukrainian product is quite large. And, even if our country will increase the processing of soybeans by 2-3 times there would be no problem to export it.

5. The trade dispute between the US and China will not affect the Ukrainian market. There will be the market reshuffle of the trade flows from one country to others that would not change the overall balance of soybeans. It is clear that the South American soybeans will be transferred to China and soybeans from the USA – to Europe.



Oleg Domanov, Commercial Director at Falcon-Agro

1. We believe that the increase of the meal production is connected with the growth of the soybean crop and industrial capacities brought into service. Traditionally, the first halve of the season is not very active and we hope that the next season the processing volume will be higher.

2. The main product of processing is soybean meal, which has the constant strong demand. Herewith, the market of soybean oil has many factors, which influence the veg oil prices – such as palm oil prices and international policy towards the biodiesel, and crude oil prices. On the other hand, the manufacturing of animal feed for poultry production demonstrated the strong growth, which in turn gives the basis for the growth of soybean meal.

3. The list of the consuming countries of the soybean products has not change significantly. I would point out some of the facts that allowed increasing the export. This refers to the Republic of Belarus. First, it is not a secret that the deficit of the grain cars during the FH of the current season did not allow to satisfy the growing soybean meal demand of the Belarus market. Herewith, during the SH of the MY while many market participants, including our company, have managed to adjust to the new conditions of Ukrzaliznytsia (our company rents the grain cars), the Belarus market had the oversupply of soybean meal made by “Sodruzhestvo”. “Falcon-Agro” had to decrease the export of soybean meal to Belarus by halve and focus on the export in terms of FOB.

4. We believe, that the main objective of any processing enterprise is to have high processing marginality of oilseeds that is why it is difficult to say which of the oilseed will be more profitable in the new MY. As usual, the soybean crop is three times lower than the sunflower crop. Moreover, the VAT refund cancellation might be not final.

5. Brazil is going to compensate the soybean crop losses in Argentina.

The main factor to influence the soybean price formation in Ukraine is the realization of the VAT refund cancellation.

The trade dispute between the US and China is not going to change the level of the soybean consumption by China. And, the soybeans from the USA will be transported not directly, but via Argentina or Brazil. According to the statistic data, the import of soybeans to China has not declined – it is actually growing.

If there will be no cancellation of the VAT refund of the soybean exports we will witness the strong demand rate and the active exports of soybeans, and the processors competition for the raw materials in Ukraine will preserve.

If the cancellation is adopted (since 1.09.18) the strong demand rate on the finished product both inside the country and for the exports will preserve, which means that the enterprises will increase their processing volumes. That will also give the possibility for the soybean producers to keep prices high. Anyway, the production will grow and the sales will increase. Let’s hope!



Lilia Voytukh, Deputy Director at TH Mayola (PE Oliyar)

1. I believe that the growth of processing capacities of soybean is based on the global prices increase of the soy products, in particular of soybean meal. Moreover, we should take into account the increasing trend of the soybean processing capacities in Ukraine.

2. Soybean oil correlates with crude oil. Thus, the prices of the crude oil did not increase and the soybean oil prices did the same. If we speak about soybean meal, the prices correlate with the prices of soybeans, which in turn depends on the oilseed yield at the main countries exporting the soybeans – the US, Brazil, Argentina and China. Also, the adverse weather conditions in Argentina led to the prices hike of soybeans and meals.

3. Our company is oriented on the any type of the oilseed distribution. Here, if we compare the previous seasons I can tell that the main buyers of our products did not change – Belarus, Poland and Baltic states. In general, we orient on the other areas and consider the possibility to export the products to China, India and the EU. Thus, considering the soybean crop decrease in Argentina and the geographical closeness to the EU countries this market is quite prospective for us.

4. As we speak about the VAT refund cancellation in terms of soybean export, this law will allow to fill the processing enterprises by soy and we would avoid the export of the oilseed abroad. In other words, our country will be able to change its status as the exporter of raw materials.

That is why we support this step – it will allow to invest more for the construction of the new plants and to create new jobs. If we speak about the reorientation of the processing, it is possible that some enterprises will increase the processing volumes of soybeans.

5. If we speak about the crop decline in Argentina as a factor of price formation in Ukraine, I believe it to be supportive. As far as I know, the trade dispute between China and the US is slowing down. However, if it will go other way, the conflict will be beneficial for the Ukrainian market of soybeans. Because China will increase the import of soybeans from Brazil and the EU countries in turn can start buying more Ukrainian soybeans and meal, as we are geographically closer that the South American countries, thus the logistic expenditures will be lower.


Prepared by Viktoria Zelenaya, APK-Inform Agency


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