Black Sea Oil Trade – 2017: Ukrainian Vegoil Industry Needs A National Brand

UKRAINIAN SUN OIL AS A PREMIUM PRODUCT IN THE WORLD MARKET. IN SEARCH OF A NATIONAL BRAND Creation of a national brand for Ukrainian sunoil was one of the central issues discussed at the V International Conference "Black Sea Oil Trade" ...
By: Commodity market analyst "UkrAgroConsult"
 
 
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KYIV, Ukraine - Oct. 17, 2017 - PRLog -- Creation of a national brand for Ukrainian sunoil was one of the central issues discussed at the V International Conference "Black Sea Oil Trade-2017" – a leading event of the Fat&Oil Industry of Ukraine and Black Sea countries, held in Kyiv on September 19, 2017. Organizer – consulting agency UkrAgroConsult, General Sponsor - ING Bank. 'Black Sea Oil Trade' Conference annually brings together key players of the global agricultural market at the start of the oilseed season. Over 200 delegates from 30 countries of the world registered to attend the event.
Opening the conference, Pieternel Boogaard, Head Food & Agri Europe, ING Bank NV (the Netherlands) noted that Ukraine has been showing substantial progress in the fat-and-oil sector over the recent years. "Back a decade ago, no one could suppose that Ukraine would be on a par with, say, Argentina, which was the number one in the fat-and-oil economy then, and come close to a sunseed volume of 20 MMT a year," she said.
Volodymyr Pugachov, a representative of the Agrarian Policy and Food Ministry of Ukraine, also stressed that the oilseed sector's indicators are "inspiring" and pointed out that Ukraine is now the leader of the global sunoil market.

NO BRAND – NO TREND
Almost all of the conference participants said that promotion of Ukrainian sunoil to international markets is extremely problematic without a national Ukrainian sunoil brand. The tone of the discussion was set by a speech by Sergey Feofilov, Director General, UkrAgroConsult "Further prospects of the global sunoil market can be hardly imagined without shaping a special 'premium product' segment," he emphasized.
According to the speaker's statistics, over 180 MMT of vegoils were produced globally in the 2016/17 season. The speaker analyzed present-day situation in Ukraine's fat-and-oil sector and noted that, despite current quite good performance (top position among the world's sunoil exporters, sunseed margins at over 60% etc.), the industry is facing a number of problems, which can lead to substantial changes in the very near future.
Sergey Feofilov brought an example of sugar market, where Ukraine used to be on the top position.  In 1990, the country was the world's biggest producer of sugar and one of its 5largest exporters. However, due to competition with cheaper cane sugar, absence of state support and other factors, this position was almost entirely lost.
S.Feofilov is sure that the case of Ukrainian sugar market should be taken into account when analyzing Ukrainian sunoil's prospects in foreign markets.
Firstly, sunoil pricing is influenced quite substantially by production of the cheapest vegoil, i.e. palm oil (its output will gain 20-25 MMT by 2025), while other vegoils' prices tend towards the palm oil level. Secondly, Russia has been increasing sunoil production and exports over the recent years and successfully competes with Ukraine. So, the construction of a vegoil-handling terminal with an annual capacity of 1.5 MMT was started in Novorossiysk (plus operational handling facilities in Taman with an annual capacity of 1.2 MMT a year). Also, importantly is that Russian sunoil exports are on the rise since 2015 and will exceed 2 MMT in MY 2017/18. Russia steps up sunoil deliveries to China and India too.
The present-day Ukrainian fat-and-oil sector's strategy, aimed at increasing production, crushing and exports, does not pay off under such conditions, neither does monopolization of trade channels, S. Feofilov stressed. The sugar story may repeat, the analyst noted. In opinion of S. Feofilov, the above-mentioned situation can be responded by creation of a national brand for Ukrainian sun oil as a premium food product and its promotion to the global market by 2025.
Artem Hammerschmidt, Senior Analyst of OilWorld, Germany, drew the audience's attention to an interesting fact: global sunoil output has not changed over the last decade.
According to Hammerschmidt, sunoil currently accounts for 8% of the world's vegoil production, which includes 17 vegetable oils and fats. This share is equal to that registered in the 1997/98 season.
When describing the sunseed production trends in the current 2017/18 season compared with 2016/17, A. Hammerschmidt pointed out that production increases are to be expected in Argentina (+0.5 MMT), Turkey (+0.2 MMT), China and Russia (+0.1 MMT each). Sunseed output in Ukraine and Canada are forecast to drop by 1.2 MMT and 0.4 MMT, respectively.
According to the analyst, the world market is now dominated by palm oil, which replaced soybean oil in the top position a decade ago.
Palm oil has come to the fore in the last ten years (31% of total vegoil production against 17% in the 1997/98 season). Simultaneously, soybean oil output has gained 2% and reached 25% of the world's total (the second largest volume) against 23% a decade ago, when it was the leading vegoil.
When describing the global market of the 17 vegetable oils and fats, the speaker reported that the most powerful exporters include Indonesia, Malaysia, CIS countries, Argentina, Canada and Brazil. The top importers are South Asian countries (India, Bangladesh, Pakistan), the EU, China and the USA.

....More V International Conference "Black Sea Oil Trade-2017"- http://www.blackseagrain.net/novosti/black-sea-oil-trade-...

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