The price of feedstuff in some parts of Ukraine has nearly halved due to proximity to hostilities, the Ukrainian association of pig breeders reported.
The prices have plummeted due to an oversupply, as Ukraine produces more grain than the domestic market can consume, and farmers in the south-east often rush to get rid of the grain stocks to get money to maintain operation.
The low prices are partly offset by logistical chaos, as farmers are ready to sell cheap grain only for cash and with self-delivery from the seller’s farm. So the favourable price conditions can hardly be called ubiquitous.
In addition, not all pig breeders managed to secure the benefits of a sharp decline in the feedstuff prices, as many farmers made stocks for the entire marketing year until the new harvest, and are running on grain purchased last year at a higher price, the pig breeders association said.
Given the rising costs of logistics, the final cost of feedstuff for pig farmers in Ukraine has fallen by an average of 20-35% against the pre-war level. Prices halved only for sunflower meal and cake, the Ukraine pig farmers estimated.
Low feedstuff prices supported Ukrainian pig farmers who have to operate in extreme market conditions, with 20% of production capacities located in the territories occupied by Russian troops or close to the conflicts, the breeders association said.
On the other hand, there is no certainty how long feedstuff prices will remain low. The Ukraine pig breeders association warned about mounting fears that after Ukraine unblocks its seaports, prices for grains and oilseed products will soar, catching up with the global level.
It is estimated that currently, Ukrainian farmers sell their products at prices on average $100-200 per tonne below the global prices.
After demining the waterways from the Ukrainian ports, Ukraine would need at least 2 months to restore the normal operation of its port infrastructure, the Ukraine pig farmers said, adding that the prices are not expected to skyrocket in an instant, but rather to grow steadily, depending on the pace of export rebound.
With a high probability, this season Ukraine could see a lack of feed on the domestic market, the Ukrainian pig farmers warned. To some extent, this could be associated with export activity and that farmers abandon grain production on some agricultural land.