Good demand: Ukrainian processors compete for sunflower stocks

At the beginning of the marketing year, soybean performed much better in terms of production profitability. Starting from February, especially in March, the situation improved. Now Ukrainian sunflower oil is in demand among importers. Thus, the margins of refiners are increasing, so they are actively fighting for the remaining raw materials.

The reason was that the price of palm oil rose significantly on the world market. Stocks of exporters and importers were reduced, and already in March, sunflower oil traded at a discount to palm oil at the level of $100 per ton. Of course, big oil consumers like India and China took advantage of this and switched to sunflower oil. So, in March, India imported almost 450,000 tons of sunflower oil. While in January this indicator reached only 220,000 tons

Those who have sunflower reserves will win

These factors had a positive effect on the domestic market as well. Considering the bad start of the season, many producers sold out their stocks before the new year or at the beginning of this year. But those who still have reserves are now in a winning position. Local factories tend to buy more even if they have enough of their own reserves.

A feature of the current season is the growth of processing volumes in Ukraine. The rates of sunflower processing increased by 20% compared to the previous season. Processors understand that this season sunflower remains are finishing very quickly due to the record processing in Ukraine. According to analysts' estimates, farmers have 5.8 million tons of sunflower in their warehouses. While last year, as of the same period last year, stocks were 6.5 million tons. This is a noticeable difference.  So, of course, the competition for reduced stocks of raw materials is becoming more acute.

Processing volumes are growing

Last season, the processing capacities of oil plants have reduced. A lot of sunflower was exported unprocessed. it is about 1.6-1.8 million tons. Now the processors have better adapted to the current conditions. This explains the growth of processing volumes, and not only sunflower. This season they began to actively process rapeseeds. They have already processed under 1 million tons, while Ukraine usually processed a maximum of 300-350 thousand tons. That is, the indicators for rapeseed have increased 3 times. There is also an increase in soybean processing.

The capacities are there, but the raw materials are still limited. There is fierce competition for raw materials, which is much higher this season than the previous one.

That is why farmers can not be afraid to sow sunflower. The majority of market participants in December-February were inclined to believe that agricultural producers will reduce the area under sunflower. And even the Ministry of Agriculture made predictions about the reduction of areas. However, now, starting in March, part of the producers still have the opportunity to replan the areas and change the structure of the sowing area.