Ukraine grain outlook bolstered by trade disputes
The outcome of trade disputes between China and the US and Canada will be a key determinant of Ukrainian export flows in the coming months and years, delegates heard at the Black Sea Grain conference in Kiev.
Negotiations between US and Chinese trade officials could draw to a close at the end of this month. Whatever the outcome, the end of the process is likely to dictate the direction of global grain prices and redirect international grain trade flows.
If a trade deal is reached China will import up to 4.3mn t/yr of corn from the US, Chinese trading firm Donlink Grain and Oil's director Renault Quach told the conference. If no deal is struck, the offtake will be well below that, and this could open opportunities for Ukraine to further increase its market share in China. Ukraine has been the largest single corn supplier to China since 2015, and does have theoretical capacity to export more — its overall exports were around 4.5mn t below production in 2018-19, according to the USDA.
Trade tensions could affect the fundamentals for barley also. China could import feed barley, which it uses interchangeably with sorghum, from Ukraine should no agreement with the US be reached. China also has stable demand for malting barley, for which it depends on imports from Australia and Canada. But Beijing has a trade dispute over Canadian canola exports, and is carrying out an anti-dumping investigation into Australian malting barley. Quach sees an opening for Ukraine here as well.
"There is a big opportunity for Ukraine to export [malting barley] to China", he said. However, Ukrainian feed grains are likely to lose Chinese market share if a deal is reached before mid-2019.
Ukraine's rapeseed growers could find a new opening from the trade conflict between Canada and China, according to UkrAgroConsult's oilseed expert Julia Garkavenko. Although Ukraine does not have a permit to import rapeseed into China, this could change.
"Ukraine's representatives have already left for China to solve this issue", Garkavenko told Argus. Until such time as a permit is granted, Ukraine sends rapeseed oil (RSO) to China.
"Ukraine could be an attractive alternative" for China, Garkavenko told the conference, adding that RSO exports to China have already picked up pace in the past year.
The prospect of a trade deal between China and the US is already buoying global grains markets, US agricultural advisory AgResource's president Dan Basse said in Kiev. With world stocks at long-term highs, grain prices should really be lower than they are, Basse said. He sees the chances of a trade deal as fairly high. Quach agreed, telling Argus: "I believe there will be a deal".
Quach said while the importance of US feed grain for China has been in steady decline, "There is no other market in the world to replace [Chinese] import volumes of soybean and sorghum" and therefore China is in a strong negotiating position. However, while China's grain sector could adjust to a no-deal scenario, trade disputes particularly threaten the country's manufacturing sectors, said Quach. Therefore "from an economic point of view, our country does need agreement with the US", he said.
Related news posts
EU fertilizer industry calls for support: Q&A
EU fertilizer industry calls for support: Q&A
London, 17 July (Argus) — As the EU gears up to install a new European Commission for 2024-2029, LAT Nitrogen's chief executive officer Leo Alders tells Argus political support remains necessary to tackle a range of challenges threatening EU industry, including subsidised US ammonia production with carbon capture, use and storage (CCUS), and the EU's 'unrealistic' goal of cutting net greenhouse gas (GHG) emissions by 90pc by 2040. But Alders sees growing political "goodwill" to help EU industry against cheap fertilizer imports from Russia, which are used to fund the country's war against Ukraine. Edited highlights follow. What does the fertilizer industry want from the next European Commission? Clear points are effectively releasing emissions trading system (ETS) funds for converting the industry to green fertilizers. We also want carbon sequestration to be allowed as it is in the US. And we need a policy on nutrient efficiency, which has never really happened. For us, too, spillage is not the desired objective. The international context, too, is important. Grey ammonia produced in Europe could move to the same cost levels as US blue ammonia with subsidised CO2 sequestration. If or when that happens, then Europe will see massive imports of US blue ammonia. We think that by 2027 or 2028, volumes coming out of the US will grow exponentially. That's a trend that we think is unstoppable. The underlying issue, of course, is that energy in Europe is at higher price levels than on any other continent. We need to stay in Europe with our production capacity. But the threat is there. Are 90pc GHG cuts by 2040 feasible for you? When discussing the ETS measures, the carbon border adjustment mechanism, and so on, we took a positive approach as an industry. And we go alon g with the zero [carbon] target for 2050. That's all right. But now the [2040] target is not official, more a desired milestone that emissions will be cut by 90pc by 2040. As an industry, we think that target is totally unrealistic and cannot support it. That's a clear point of view. Converting to a green industry will require massive capital. Technologically, it takes time to do all of this. Is the ETS working well for the fertilizer industry? Proceeds from ETS certificates go partly to national budgets and partly to the EU budget. That's all nice. But our industry needs to invest massively to complete the transition. We pay massive amounts of money for CO2 certificates. There was the promise that national and EU levels would subsidise decarbonisation projects from the ETS. In reality, we've seen very few subsidies materialising. So we actually have a counter-proposal: why not allow the industry to park the money for green investments? In theory, the national level is obliged to reinvest 50pc of ETS income back into the industry. The reality is different. Isn't the EU still wary of prohibitive €100-150/t tariffs on Russian fertilizers? A ban on Russian fertilizer imports would require unanimity. Tariffs, though, require majority support among EU states. That seems feasible. At least 15 states appear to support the idea. There is actually no supply issue. We don't have any issues replacing Russian volumes. There may be a possible time element and rebalancing in the first three or four months. But after that, the European industry would be fully capable of supplying our farms. So political support is growing? More and more people understand how Russian gas is being transformed into fertilizer. They've understood that routing gas to Europe is becoming more and more difficult. The EU has been totally unsuccessful in pushing back against Russian urea, so Russia is building some 650,000 t/yr in extra capacity, expected on line next year or thereafter. As an industry, we don't want to be shutting down units in Europe because of cheap subsidised Russian fertilizers. And then, what happens if one day Russia decides to cut or weaponise fertilizer supplies? By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
German sulphur exports drop 53pc in Jan-May
German sulphur exports drop 53pc in Jan-May
London, 17 July (Argus) — German sulphur exports halved in the first five months of this year, GTT data show, as production has declined and consumption is recovering from the post-pandemic slump. Average monthly exports dropped to just 11,000t from 23,000t in the same period last year. Imports remained stable at 23,000t. Top export markets in 2023 Belgium, the Netherlands, France and Sweden dropped to zero this year. Belgium previously received 52,000t, Netherlands 26,000t and Sweden and France 13,000t each. Minor Swiss exports at 7,000t maintained stable. German sulphur production has dropped as a result of sanctions on Russian crude imports. This has particularly impacted the 150,000t/yr sulphur capacity TotalEnergies Leuna and the 175,000t/yr PCK Schwedt refineries previously connected via pipeline to Russian crude supply. Sanction impact was followed by Red Sea insecurity cutting a further 10pc of the region's sulphur production as Middle East feedstocks declined, and sweeter slates became even more widespread. European refineries, German plants included, were running at high rates last year with refining margins very high, and this year's maintenance season has been heavier as a result of deferred turnarounds. In Germany, Miro's 131,000t/yr sulphur capacity Karlsruhe refinery was under maintenance in April. Two refinery conversions to biofuels production are planned to take place in 2025, with Shell's Wesseling plant to take 80,000t/yr of sulphur production capacity off line and BP's Gelsenkirchen a further 25,000t/yr. This is a trend repeated in other countries in the region, in a move to meet emissions reduction targets, so sulphur production is set to decline further. Sulphur consumers which have struggled with low downstream demand, high energy prices and inflation, as well as competition from cheaper Chinese imports of caprolactam and titanium dioxide, are beginning to see some improvements. The European fertilizer industry has been more resistant, and some capacity additions are bucking the general European trend. This has led to several companies targeting the European molten sulphur market with high-priced spot tonnes in this year, as well as others accelerating planning of new remelting capacity, to address the deepening shortages. Some companies are looking into adding molten sulphur tanker capability to import more spot tonnes to the liquid-only market, where most buyers have no capacity to handle solid sulphur imports. New projects along these lines are expected to be announced in the coming months. By Maria Mosquera Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Yara to supply PepsiCo with reduced-carbon ferts
Yara to supply PepsiCo with reduced-carbon ferts
London, 17 July (Argus) — Norwegian fertilizer producer Yara has signed an agreement to supply global food and beverage manufacturer PepsiCo with 165,000 t/yr of fertilizer using feedstock from Yara's renewable and CCS ammonia production projects. The agreement stipulates Yara will work towards supplying PepsiCo with fertilizer products exclusively from Yara's ‘Climate Choice fertilizers' range by 2030. The length and start date of the supply agreement were not disclosed. Yara's Climate Choice fertilizers range will include nitrate fertilizer products which are produced using ammonia from the company's 20,000t/yr renewable ammonia plant in Porsgrunn . The plant began commissioning earlier this year. The range will also include products using ammonia feedstock from Yara's carbon capture and sequestration (CCS) production project at Sluiskill , which is expected to begin CCS operations in 2026. The range also includes Yara's premium nitrate-based fertilizer products, with which newer catalyst technology results in carbon footprint reductions when compared to older production plants. The carbon footprint of the ammonia feedstock will vary dependent on these production pathways. Porsgrunn ammonia can produce nitrate mineral fertilizers with a 70-90pc carbon reduction when compared to fossil-fuel natural gas production pathways. Argus estimates nitrate fertilizers require 0.26-0.43t ammonia per tonne of nitrate product on average (see table). The ammonia consumption rate varies on the nitrate product concerned, and whether it is technical or fertilizer grade. Argus estimates Yara's supply agreement with PepsiCo could equate to a requirement of around 43,000-71,000t of ammonia. Yara has signed similar agreements with other agriculture companies within Europe. In January the company signed an agreement with Nordic grocery chain Reitan Retail, Norwegian agriculture co-operative Felleskjopet Agri and Norwegian milling group Norgesmollene, to supply the consortium with nitrate-based fertilizer products with a reduced carbon footprint. And in 2023 Yara signed a similar agreement with German flour producer Bindewald, Gutting Milling Group and German bakery Harry Brot. Pricing structures for the agreements have so far not been disclosed, but the producer is expecting a premium for the low-carbon attributes of its finished fertilizers, especially once the EU's Carbon Border Adjustment Mechanism (CBAM) becomes operational in 2026. Once CBAM is applied, the increased cost for more carbon-intensive products will determine the achievable premium for lower-carbon nitrate fertilizer, the company expects. By Lizzy Lancaster Tonnes ammonia per tonne nitrate product AN (technical grade) 0.41 AN ( fertilizer grade) 0.43 CAN 0.34 AS 0.26 Argus Average ammonia feedstock estimates, actual rates vary by country. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Egypt's Kima and Helwan restart urea production
Egypt's Kima and Helwan restart urea production
Amsterdam, 17 July (Argus) — Egyptian fertilizer suppliers Kima and Helwan have restarted granular urea output, following shutdowns on 16 July. Helwan brought its 650,000 t/yr granular urea plant back on line during the evening of 16 July. It is now running at 80pc and expects product to be available from 18 July. Kima restarted its 570,000 t/yr granular urea plant earlier today and is running at around 75pc of capacity. Both producers had been running at 80pc of capacity from 2 July to 16 July. There has been no update regarding Abu Qir's prilled urea plant, which also went off line on 16 July . Most of the country's remaining urea plants have been operating at 80pc. Mopco is running only two of its three granular urea plants at 80pc, while EFC's production status has yet to be confirmed. Urea export offers had started at $380-390/t fob Egypt earlier in the week, but fresh liquidity emerged yesterday , with NCIC selling 5,000t lots at $362-367/t fob for loading at the end of this month. A gas supply crunch in Egypt has hampered urea production since 20 May, as the country prioritised gas deliveries to power plants to meet summer cooling demand. But LNG imports eased the balance at the beginning of July. Egypt fixed at least 17 LNG cargoes in a 25 June tender — seven for July, six for August and four for September. By Harry Minihan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more