According to the results of the 2019/2020 marketing year, Kernel has exported 8 million tons of grain crops. It’s a new historic high for both the company and Ukraine, as not a single agriexporter has ever reached this level. The significant rise in exports became possible due to a chain of various factors, in particular an increase of in-house port facilities.
“Kernel became the operator with the largest transshipment volumes of grain in Ukrainian ports in the 2019/2020 marketing year,” Kernel CEO Ievgen Osypov said. ”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%.”
As noted by Oleksandr Golovin, Director General of Kernel-Trade, Grain and Oilseeds Purchase Director, such positive results were achieved not only due to the record grain crop yield for the second year in a row, but also due to the efficient and well-coordinated teamwork of Kernel’s divisions in terms 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 said.
In the 2019/2020 МY, not only export volumes, but also export geography changed, first and foremost due to good crop yields in EU countries. However, China has rapidly 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 PRC became the biggest importer for Kernel, surpassing the Netherlands and Spain, which were the main export destinations during previous years. The largest amount of wheat was exported to East Asian countries: supplies to Indonesia and Thailand have increased significantly.
At the same time, Kernel had to overcome a number of challenges. The season has started with relatively high global prices due to unfavorable weather conditions in the Midwest of the United States. But prices dropped as soon as Brazil had a second record harvest. In early January, the first phase of the agreement between the USA and China was signed, which was supposed to put an end to the trade war. However, the market didn’t respond to it, showing no reaction at all. COVID-19, which arose in February-March, became the key factor which is still dominating in the world market. Rapid spread of the pandemic 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.
According to the projections of Oksana Karabin, Head of the Grain Trading Department, the 2020/2021 МY will be no less dynamic. The key trend is food processing in the world. A sharp increase in corn production is expected in the US, and, together with weakened demand for grain, they will put pressure on global prices. Also, demand for biofuels has rapidly decreased. Cheap oil makes bioethanol and biodiesel economically unviable. This is bad news for the agrisector. One more problem from a political perspective is the threat of breaking off the trade agreement between the US and China.
“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 added.
By the end of the 2020/2021 MY, Kernel is planning to increase grain export volumes and strengthen its leadership on the market.
