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Ukraine exports first soymeal to China prepares for new tax regime

Ukraine exports first soymeal to China prepares for new tax regime

KIEV: Ukraine’s oilseed industry is readying itself for a new tax regime later this year which will shake up the sector while this week it shipped its first cargo of soymeal to China at a time when Beijing is scrambling to find new sources of soybeans.

Producer and trader Kernel sold the 48,000 mt cargo, which was loaded at Chornomorsk earlier in the week.

“This was the largest consignment of meal ever shipped from Ukraine on one vessel,” logistics firm Stark Shipping said in a research note published earlier this week.

Given the size of its domestic soybean crushing capacity, China is not typically a big buyer of soymeal, with annual imports averaging around 1.5 million mt over the last five years.

However, the sale took place amid heightened trade tension between Beijing and Washington, with soybeans caught in the middle of a war of words that has raised questions about whether China can source soybeans or animal feed without buying American.

While Ukraine has a large and well-developed oilseed crushing and processing industry, it only exports small volumes of soymeal at present, with 2017 sales coming to just over 300,000 mt – the bulk going to Hungary, Belarus, and Georgia.

The cargo’s sale comes at a time when Ukraine’s government has been keen to increase domestic processing and refining of oilseeds, with an aim to create jobs and boost the value of its exported produce.

A controversial plan to abolish VAT reimbursements for soybean exports was postponed by parliament in late 2017, with a start date pushed back from March to September this year in a move which gave the industry more time to adjust.