How the industry is changing and what to expect in the future – the flour market analysis

Before the start of the new grain season, it is necessary to take stock of the current situation in order to understand how the industry will develop in the future. The experts conducted a detailed analysis of the flour market and identified factors that influence its formation and can bring dramatic changes in the new year.

General flour market analysis

Now in the country, there is a decrease in the production of flour. The reason for this is largely a decrease in population. Official statistics on the production of flour of various types reads as follows:
● 2016/2017 season – 1,527 million tons;
● season 2017/2018 – 1,483 million tons;
● season 2018/2019 – 1,282 million tons
It should be borne in mind that these figures do not fully correspond to the real picture since shadow production is approximately 30-50%.
These statistics are affected by changes in supply volumes – the fall at the end of 2018 and the beginning of 2019 is explained by a sharp decrease in exports.
In the milling industry, there is a process of modernization. Large corporations, such as “Vinnytsia KHP No. 2”, “Vasyl’kivhliboprodukt” “Enlil”, increase production volumes, replace equipment with a newer one.
New objects also entered the market: “Chmielnicki Mlyn”, “Agrodar”, and “Mover Mill”. They have good indicators of growth in exports and domestic sales.
Unfortunately, the milling industry is not interesting for investors. The main capital comes from owners and grain traders, while businessmen from other areas are in no hurry to develop a new market. This is due to the fact that the sphere is quite costly and marginal. To make the company profitable, you need to invest in new equipment, which will reduce staff costs and reduce costs.

Flour market analysis of export decline and its impact

According to statistics from the Ministry of Agrarian and Food Industry, for 2018 and 2019 a decrease in the volume of flour exports by 40% is observed. The decisive factor in this situation was an ill-conceived policy. Approximately 40% of all deliveries were to one country – North Korea and new promising areas were ignored. Russia was able to offer more favorable conditions for the DPRK, as a result, domestic supplies decreased, and export volumes sank significantly.
In search of other directions, millers began to actively explore the market of the countries of the Middle East and Africa, to increase exports to Southeast Asia. Shipments to the UAE are growing. In the first quarter of 2019, shipments to this country amounted to 5787 tons – more than to Korea, where 3425 tons were sent.

The decline in the cost of wheat on the world market did not significantly affect the domestic millers. Compared with 2018, when the average price for grain was $ 210, in 2019 the figure rose to $ 249.
Analysis of the flour market shows positive development trends. By upgrading existing facilities and building new ones, export positions can be significantly strengthened.

Учитывая широкий спектр технических областей, в рамках которых развивается и консультирует Александр Пан, данный ресурс ведется пресс-службой эксперта. В настоящий момент мы постоянно обновляем актуальные темы, входящие в компетенцию Александра - это IT, Искусственный Интеллект, Блокчейн и финансовые разработки. Желаем вам увлекательного чтения и приятного времяпровождения на данном блоге.

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How the industry is changing and what to expect in the future – the flour market analysis