Ukrainian grain is quite competitive on the MENA market — Cotecna

Source

APK-Inform

2577

Traditionally, the MENA region generates the significant interest among the global key exporters of grains and oilseeds, which somewhat exacerbates the competition rates between crop suppliers. In order not to lose in the struggle, first of all it is necessary to satisfy as much as possible requests of buyers regarding the qualitative features of the supplied products. Therefore, we talked with Arina Korchmaryova - MBA, BSc Chemistry and Biotechnology, Vice President - Baltic, Black and Caspian seas Business Group at Cotecna Inspection, about the current positions of Ukrainian grains on the reporting market, prospects of increasing of the supplies and many other things.

 

— Currently, the grain market in the MENA region is one of the dominants with regards to the export of grains from Ukraine. In your opinion, what could be the reasons for this situation?

Traditionally, the main consumers of Ukrainian wheat are countries of Asia, North Africa, the Middle East, and the European Union. This situation could be explained by the relative geographical proximity of these regions to Ukraine, the convenience of delivery and the constant need for this type of grain. Whereas in Asian and African countries there is a demand for Ukrainian milling wheat, for European countries it is more common to import the feed wheat from Ukraine.

It should be also noted the transformation of the geography of Ukrainian export supplies. Thus, over the past ten years, the export of Ukrainian wheat to Asia and Africa has grown significantly. It became especially noticeable in the period of 2006-2010. First of all, due to the increased demand in these countries for medium quality milling wheat. Also, the global crisis gave Ukrainian exporters the opportunity to enter new markets, such as those of South-East Asia. During the same period, supplies to EU-27 countries decreased, which is explained by the fact that since 2002 EU-27 has had quotas for low and medium quality wheat. In the long run, it is based on South-East Asia and sub-Saharan Africa the exports from Ukraine may increase significantly, given the quick growth of the population in these regions and the corresponding increase in food demand.

 

Exports of wheat (2017/2018 vs 2018/2019)

Source: www.apk-inform.com

 

The 2018/2019 season is characterized by a general decrease in wheat exports, which is basically caused by decrease of the harvest. The structure of wheat exports is dominated by the tendency of reorientation to the regions of MENA (39.7% of total Ukrainian exports, +3.2% per year) and South and East Asia (46.7% of total Ukrainian exports, +3.9% per year). The share of European countries and the rest of Africa is decreasing. Indonesia, Egypt, the Philippines, Bangladesh and Morocco are still among the largest importing countries.

 

Exports of barley (2017/2018 vs 2018/2019)

 

Same as for wheat, we see a decrease in barley exports. As for the structure of exports, we see an increasingly dominant position of the MENA region (86.4% of all exported barley from Ukraine), where Saudi Arabia still holds the first position.

 

— Could You please describe the preferences of buying grain products by such MENA countries as Lebanon, Egypt, Saudi Arabia and how they could be explained?

 

LEBANON

During July 2018-June 2019 Ukraine export to Lebanon 336 809 MT of wheat, 277 055 MT of corn, 24 425 MT of Barley. The most priority crops are wheat and corn. As for the import of wheat by Lebanon, the lion's share of supplies is effected by the Russian Federation and Ukraine, which are the most competitive in comparison with other suppliers.

 

EGYPT

During July 2018 – June 2019 Ukraine export to Egypt 2 844 222 MT of corn, 1 927 036 MT of wheat, 68 305 MT of barley. Corn and wheat are the top priority crops. In the Egyptian direction, we have recently seen a significant increase in exports of corn, which is associated with a record harvest of corn in Ukraine. As for wheat, Ukrainian exporters still face serious competition from the Russian Federation, however this does not prevent them from regularly shipping wheat to Egypt. The position of the Black Sea wheat in the Egyptian market is still very strong due to geographical, price and seasonal advantages.

 

SAUDI ARABIA

During July 2018 – June 2019 Ukraine export to Saudi Arabia 2 327 946 MT of barley. The priority and main grain crop is barley. Ukrainian and Russian barley represents the main volume of imported barley by Saudi Arabia. It could be explained by the limited list of barley exporting countries - the market is narrow and the threshold for entering is very high, so traditional suppliers have impressive and stable volumes of barley.

 

— What are other potential reserves for increasing shipments from Ukraine to this region?

 

Comparative statistics of grain production in Ukraine (KMT)

Comparative statistics of niche grains (KMT)

Analyses of demand from Lebanon, Egypt and Saudi Arabia

 

The increase in shipments is first of all related to higher yields and optimization of supplies. Egypt, Lebanon and Saudi Arabia are the countries that are among the Top 20 markets in focus for Ukrainian exports (according to the Export Strategy of Ukraine), so Ukraine will increasingly orient itself and strengthen its position in these markets. The 2019/2020 season is characterized by an increase in wheat harvest and thus we could expect the growth of general export as well as the to these countries.

As for niche crops, the market is not quite relevant at the moment (in recent years, we have seen a steady decline in cultivated areas under these crops, and therefore production volumes are gradually decreasing). Cultivation of traditional crops at the moment is more economically reasonable.

Another reserve for increased shipments is the dynamics of supply and demand in these countries. The population is steadily growing, the opportunities for own production are limited, which is a good prospect for increasing exports of Ukrainian agricultural products to these countries.

 

— Speaking specifically about the current season, what are the results of quality testing of new crop Ukrainian grain? Will these quality characteristics allow Ukrainian grain to be competitive in comparison, first of all, with Russian grain?

Talking about Ukrainian Barley, at the beginning of the season, we see average test weight a bit lower than in the previous year and a higher quantity of shriveled grains that could be caused by high temperatures and scarcity of rainfalls during ripening period especially in South regions of Ukraine.

This situation is expected to improve towards the middle of the season due to the grains coming from North regions of Ukraine. In Russia, situation is about the same.

 

BARLEY – New season 2019

EN:

Statistic indicator

Test weight, kg/hl

Mois- ture, % (ISO)

Broken grains,
%

Grain impuri- ties, %

Shrivel- led grains, %

Sprou- ted grains,
%

Miscel- laneous impuri- ties, %

Extra- neous seeds, %

Unso- und grains,
%

Extra- neous matter, %

Bunteded/

smutty

grains, %

Foreign material, %

MIN

61,10

11,22

1,09

3,18

2,51

0

0,54

0,04

0,06

0,26

0

0,41

MAX

67,80

13,58

1,92

8,89

8,18

0

1,50

0,25

0,50

0,92

0

1,09

AVE

64,27

12,04

1,54

5,81

5,11

0

0,99

0,12

0,18

0,64

0

0,81

 

USDA:

Statistic indicator

Sound barley, %

Dockage,
%

Foreign material, %

Damaged kernels,
%

Broken kernels, %

Thin, % (5/64x3/4 inches)

Other grains, %

Ergot barley, %

Smutty barley, %

Total defects, %

MIN

95,20

0,34

0,12

1,20

1,28

1,85

0,45

0

0

5,94

MAX

98,12

0,58

0,41

3,30

2,30

6,41

1,29

0

0

11,96

AVE

96,85

0,47

0,26

2,12

1,95

4,40

0,76

0

0

9,23

 

Comparison: crop 2018 VS beginning of crop 2019:

 

EN:

USDA:

 

Currently, there are many deliberations regarding Wheat quality in Ukraine.

In general, quality of Wheat of 2019 in Ukraine is better than in previous years. As per various analytical opinions, percentage of milling vs feed wheat is expected to be about 10% higher than in 2018.

 

For the assessment of phytosanitary condition of wheat, we conducted phytosanitary monitoring of fields of winter wheat in 16 regions of Ukraine, representing the agro-climatic zones of the northern, southern, eastern and western parts of the country before the harvest. Visual examination of fields and results of laboratory tests performed on collected samples by means of entomological, mycological, phytohelminthological, virological and herbological expertises allow us to assess the phytosanitary state of wheat harvest as satisfactory.

Entomological examination revealed the presence of typical for Ukraine species in usual amounts without exceeding the threshold of harmfulness. As to fungal nature agents, the most common for all regions are Alternaria alternata Fr. and Cladosporium herbarum (Pers) Link.

Herbological assessment of the fields revealed usual species of wild plants associated wheat weeds. The most common are: Convolvulus arvensis L., Polygonum convolvulus L., Setaria glauca L.P.B., Delphinium consolida L., Aegilops cylindrica Host.

 

Regarding Milling Wheat quality parameters, test weight and shriveled grains show the same tendency as described above for barley.

It is worth to mention higher quantity of bug-ridden grains. We assume that such situation could also be caused by weather conditions as at the beginning of summer there was a strong heat in Ukraine without precipitation with temperatures up to 35 ° C and higher. Such climate condition provoked reproduction and increased activity of insect pests. In combination with usage of some seeding material not resistant to Eurygaster`s, we see the increased quantity of insect damaged wheat, including bug-ridden grains.

Concerning baking qualities of milling wheat, we expect to see a weaker gluten and broader variance (in between Min and Max) in terms of W in comparison to the previous season.

Currently, we see some particular parcels of wheat with quite good protein content and other quality parameters at decent level, but with very low W (around 100). Still, bug-ridden grains may be below 2% on these parcels.

We assume, the situation is caused by the combination of several factors, two of them already been mentioned above.

First, quality of protein is quite sensitive to the influence of weather conditions (i.e. high temperature and lack of humidity) that provoke the disruption of bonds between molecules of the proteins. With high level of protein and gluten content, the quality of gluten is poor and dough is weak.

Among other influencing factors are increased quantity of insects (incl. Eurygaster) together with the usage of seeding material not resistant to Eurygaster`s ferments and poor quality of the soil due to the lack of proper fertilizer application schemes (to save money due to difficult financial conditions).

At the same time, during post-harvesting period of about three months, under condition of environment temperature decrease and proper storage conditions, it cannot be excluded that bonds between molecules of the protein may strengthen, that could result in higher W findings.

We will test few samples of wheat with low W (representing the very beginning of the season) in one-month period in order to check if W parameter became higher or left at the same level.

Below you can find our statistical data of rheological parameters for exported parcels of New crop (2019) Milling Wheat as of August 15, 2019: