Kernel, one of the biggest Ukrainian agricultural companies has exported 8 million tons of grain crops, according to the results of the marketing year 2019/2020, announced by the CEO Yevgen Osypov. It’s a new historic record for Ukraine, as not a single agriculture exporter has ever reached this amount.
This substantial rise in exports became possible due to a chain of various factors, in particular an increase of in-house port facilities. By the end of this marketing year, Kernel is forecasting to increase grain export volumes and strengthen its leadership on the market.
Kernel became the operator with the largest transshipment volumes of grain in Ukrainian ports in the 2019/2020 marketing year. During the last two years the company has doubled export volumes, increasing its market leadership. Kernel’s share in total grain exports from Ukraine has grown from 11.6% to 13.3%.
Yevgen Osypov, CEO of Kernel
As declared by Oleksandr Golovin, Director General of Kernel-Trade and Grain & Oilseeds Purchase Director, such positive results are not only due to the record grain crop yield for the second year in a row, but also for the efficient and well-coordinated teamwork of Kernel’s divisions of purchases, trading and logistics.
The record would not have been possible without fruitful cooperation with agriproducers. The agribusiness division of Kernel has supplied 2.8 million tons of grain. We have purchased 5.2 million tons more from agriproducers, partly owing to forward purchases, financing agreements and the Open Agribusiness partnership project. The figure has increased by 63% y-o-y. Our plans for this year are even more ambitious – about 7.4 million tons.
Oleksandr Golovin, Director General of Kernel-Trade
Kernel's figures showed not only an increase in export volumes, but also a change in the export destinations, mainly due to good crop yields in EU countries. However, China has significantly increased purchase volumes and bought over 1.5 million tons of corn from Kernel, which is 6 times more than in the previous season. Thus, the People's Republic of China became the biggest importer for Kernel, surpassing the Netherlands and Spain, which were the main export destinations in the previous years. The largest amount of wheat was exported to East Asian countries: supplies to Indonesia and Thailand have increased significantly.
According to Oksana Karabin, Head of the Grain Trading Department, the 2020/2021 marketing year will be no less dynamic. The key issue is the food processing trend in the world. A sharp increase in corn production is expected in the US, and, together with the weakened demand for grain, they will put pressure on global prices. On the other hand, demand for biofuels has rapidly decreased. Cheap oil offer makes bioethanol and biodiesel economically unsustainable. These are bad news for the agrisector.
Kernel will face several challenges in the near future:
- The season has started with relatively high global prices due to unfavourable weather conditions in the Midwest of the United States. But prices dropped as soon as Brazil had a second record harvest.
- In early January, USA and China signed an agreement, which was supposed to put an end to the trade war. However, the market didn’t show any reaction at all. The threat of breaking off this new trade agreement has a negative impact on international trade.
- Covid-19, which arose in February-March, became the dominating factor in the world market. Rapid spread of the epidemic and global lockdown caused a recession in the world economy, and it affected food demand. The decline in people’s incomes together with the ethanol crisis in the US have collapsed global grain prices.
The situation is tough. However, agribusiness, unlike many other sectors, has not stopped and continues working. We regard global challenges as work intensification incentives. Further increasing sales on CIF terms, stepping up purchases and boosting cooperation with agriproducers are the main priorities for Kernel.
Oksana Karabin, Head of the Grain Trading Department
Source: kernel.ua
