Ukraine eyes soybean imports as local supplies dry up

Ukraine – the ninth largest soybean producer in the world – is looking to import soybeans after local supplies dried up and domestic prices surged, market sources told Agricensus.

A combination of one of the smallest crops in years, the reluctance of farmers to sell their beans, and heated prices for the oilseed in the domestic market, have potentially opened an import window for Ukraine.

Ukrainian crushers have started to look towards the record-beating Brazilian soybean crop as an alternative supply, with some already deciding to price- check the freshly harvested crop, several market sources told Agricensus.

“One of the main reasons that some crushers are looking to import soybeans is the positive margin,” one source at a Ukraine crusher who did not want to be identified told Agricensus.

At the same time, “purchasing imported soybeans does not exclude the fact of purchasing Ukrainian soybeans at acceptable price levels,” the source added.

“It will also allow loading capacity when the sunflower deficit increases even more.”

Ukraine’s own soybean production shrunk by nearly a third last year to a seven-year low of 3.1 million mt, as a combination of farmers planting a quarter less area, and yields falling by 9% after a dry summer took a toll, according to USDA data.

That has seen Ukraine’s own exports of soybeans fall by 50% since the beginning of the marketing year to just 1.06 million mt by the end of January, customs data showed.

At the same time, soybean stocks in Ukraine were some 18% lower on the year at 1.041 million mt by the end of last month, according to the latest data from UkrStat, with crushers suffering the entire annual fall.

Inventories at Ukrainian crushers were down 28% on the year at just 671,200 mt, while farmers are holding 10% more stock than they held this time last year.

The maths

The tight availability in Ukraine and the reluctance of farmers to sell their beans has caused soybean prices in the domestic market to surge to UAH20,000/mt ($719/mt) on a delivered basis.

Meanwhile, prices at Ukrainian ports have not reached the $515/mt CPT level, making the domestic market a more attractive option for locally produced beans, and exacerbating the lack of supply for crushers near ports.

Brazilian soybean prices have plummeted in recent weeks with the paper market in Paranagua trading briefly below Chicago futures last week, reflecting a backdrop of a slow harvest amid heavy rainfall and slow loadings at ports on the back of limited demand.

Soybeans in Paranagua for April shipment were last assessed at 8 c/bu over the May futures contract, equivalent to $510.75/mt FOB, with prices in the port of Santos assessed $1.75/mt higher.

The freight rate to bring a Panamax from Santos to Ukraine was estimated at $35-40/mt, putting a CIF Ukraine soybean price around $550/mt.

Ukraine last imported 20,000 mt of Brazilian beans in July 2020, according to the Agricensus Export Dashboard.