LONDON, ENGLAND — Kernel, a leading Ukraine grain trader, in 2019-20 exported 8 million tonnes of grain, an all-time high for the company and also a new record for a single grain exporter in the country.

“During the last two years the company has doubled export volumes, increasing its market leadership,” said Ievgen Osypov, chief executive officer of Kernel. “Kernel's share in total grain exports from Ukraine has grown from 11.6% to 13.3%."

Oleksandr Golovin, director general of Kernel’s trade, grain and oilseeds, said the record would not have been possible without cooperation from the country’s grain producers.

“The agribusiness division of Kernel has supplied 2.8 million tonnes of grain,” Golovin said. “We have purchased 5.2 million tonnes more from agriproducers, partly owing to forward purchases, financing agreements and the Open Agribusiness partnership project. The figure has increased by 63% year on year. Our plans for this year are even more ambitious — about 7.4 million tonnes.”

He noted that in 2019-20, not only did export volumes increase but export geography changed, first and foremost due to good crop yields in EU countries.

However, China has rapidly increased purchase volumes and bought more than 1.5 million tonnes of corn from Kernel, which is six times more than in the previous season. Thus, China 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 as supplies to Indonesia and Thailand have increased significantly.

At the same time, Kernel had to overcome numerous challenges. The season 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 trade agreement between the United States and China was signed, which was supposed to put an end to the trade war. However, the COVID-19 pandemic, which also arose in January, became the key factor that is still dominating in the world market. Rapid spread of the pandemic and global lockdown caused a recession in the world economy. The decline in household incomes together with the ethanol crisis in the United States have collapsed global grain prices.

According to the projections of Oksana Karabin, head of Kernel’s grain trading department, 2020-21 will be no less dynamic. He said a sharp increase in corn production is expected in the United States, and, together with weakened demand for grain, they will put pressure on global prices.

Also, demand for biofuels has rapidly decreased. He noted that cheap oil makes ethanol and biodiesel economically unviable, which is bad news for the grain sector.

The threat of the dissolution of the US-China trade agreement is another factor looming over the industry, he said.

"The situation is tough,” Karabin said. “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 agri-producers are the main priorities for Kernel.”