Agriculture

The agricultural holding Kernel [KER PW] reported on its financial results for 1Q2010 FY (July 2009-June 2010, with 1Q2010 FY ending on September 30, 2009). The Company posted a net profit of USD 39 mln on a revenue of USD 241 mln. This compares to a net profit of USD 23.2 mln and revenue of USD 371.3 mln in 1Q2009 FY. Consequently, the quarterly net margin increased from 6.2% in 2009 up to 16.2% in 2010 YoY.

The Sugar Union Ukrros holding [UROS UZ] and the Ukrroszerno agricultural holding have finished sowing winter crops for the 2010 harvest. Their area increased by 11.9%, or by 3.3 thsd ha, to 31 thsd ha, compared to the previous year. Within the makeup of the winter crops, wheat was the leading crop, being sown on 24 thsd ha. Winter barley was sown on 2.9 thsd ha, winter rape on 2.4 thsd ha, and other winter crops on 1.7 thsd ha. Currently, corn harvesting has been completed on an area of 5 thsd ha (59% of the planned amount), while sugar beet has been harvested from 14.3 thsd ha (85% of the planned amount).

On November 12, Astarta [AST PW] reported on the first nine months of the 2009 financial year. The Company’s results demonstrated positive growth on the back of increasing prices on both global and domestic markets, as well as the consolidation of its business. Revenues for 9M2009 increased by 6% YoY and amounted to EUR 75.3 mln (in UAH equivalent, it was up 57% to UAH 839.8 mln). EBITDA grew by 8% to EUR 35.4 mln, while net profit grew by 5% to EUR 21.1 mln.

On November 4, 2009, the Agroton agro-industrial holding successfully carried out a private placement of 25% of its stock through depositary receipts, which will be listed on the Frankfurt SE as of November 12. Agroton placed 4 mln depositary receipts, issued at a ratio of 1:1 to the Company’s stocks. It managed to raise USD 42 mln, with the price of each receipt at USD 10.50. According to the results of the placement, the Company's capitalization has reached USD 168 mln.

Both palm and soybean oil prices are demonstrating a tendency towards growth, according to the opinion ofOil World. Thus, world prices for palm oil should increase in December due to the reduction of stocks, and could rise to USD 80-150 per metric ton by March or April 2010. Nevertheless, according to the analysts from ‘Oil World’, sunflower seeds and sunflower oil have the greatest growth potential, which will soon rise. The main driver for this is the reduced size of harvests in major sunflower-producing countries. Prices for sunflower oil could increase to USD 120-150 per metric ton or higher in the next 3-8 months, up from the current level of 780 USD per metric ton.

In the current 2009/10 marketing year, Ukrainian grain exports have reached 9 mln metric tons, whereas the "penetration depth" of the market accounts for 50 countries of the world. The largest consumers include not only developing countries (i.e. Bangladesh, Egypt, Iran, Syria, Turkey, Kenya, Jordan, Tunisia, Morocco, Libya, Algeria), but also ‘B20’ participants, such as Saudi Arabia, South Korea, Spain, Japan, Israel, etc.

The price of sugar on world markets has continued to increase in connection with significant purchases being made for the Indian market, where major players have decided to take the opportunity to buy sugar, the price of which had lowered recently. The fact is that, in the last month, the price of sugar declined by 7.3%. The country’s overall imports will amount to 6.7 mln metric tons of sugar this season, while last season’s imports amounted to 3.5 mln metric tons.

It is expected that the oilseeds crop in India in the new season, which began October 1, will drop by 9% to 13.65 mln metric tons due to reduced land and weak rainfall during the monsoon season, according to Dow Jones. The total area under oilseeds decreased by 5% to 17.5 mln ha, compared to 18.4 mln ha last year.

The Ministry of Agrarian Policy has increased its grain export forecast by 19.76%, or 3.3 mln metric tons to 20 mln tons for the 2009/2010 marketing year. This news was announced by Yuriy Melnyk, the Minister of Agrarian Policy. He also noted that the Agrarian Fund has conducted transactions worth UAH 1.7 bln for the grain harvest in 2009.

A new major player will appear on the sugar market. Gennady Bobov, co-owner of Terra Food (TM Tulchinka) and the owner of the ‘Panda’ agricultural holding, is purchasing the Zhashkiv Sugar Plant. Experts estimate the deal to be worth approximately USD 15 mln. The entrepreneur has announced that he plans to invest another USD 20 mln in implementing energy-saving technologies at the Plant over the next two to three years.