Sunflower growers are benefiting from the shortage

Sunflower has become a seed of discord for oil producers

Photo: Konstantin Melnitskiy

Competition between the processers of sunflower seeds allows producers of the oil bearing crop to earn more. The prices of sunflower seeds grew 10-12% over a week to UAH 4,550-4,800 per ton. In some cases, the prices reach UAH 4,900/t, according to data of the State Information Analytical Center of Monitoring External Commodity Markets. The export price increased to US $380-390 for supplies to the ship.

Fighting for raw materials

Prices of sunflower seeds began to escalate at the end of September. “The trend of price growth on the domestic market is due to extremely stiff competition between processers as the supply of large shipments of sunflower seeds on the market is in decline,” says Head of the Analytical Department of the Agrarian Exchange Anatoliy Stoyanov.

Expert of the Ukrainian Club of Agrarian Business association Ihor Ostapchuk emphasizes that the prices are recouping after the decline. “This year the sunflower yield is slightly lower, which is why the supply of seeds will be less than last year,” he says.

According to the U.S. Department of Agriculture, this season sunflower production will amount to 10 mn t. The Ukrainian Ministry of Agriculture forecast a slightly lower yield at 9.33 mn t. As of October 24, agricultural enterprises harvested 9.3 mn t of sunflower from an area of 4.9 mn ha. 95% have been thrashed. Head of the Analytical Department of the AAA Consulting Company Maria Kolesnyk says the capacities for processing sunflower seeds in Ukraine amount to approximately 12-13 mn t.

Donbas won’t help

The competition for raw materials has stiffened due to the military conflict in the Donbas, says General Director of the UkrOliyaProm Association Stepan Kapshuk. The planned yield in this region was around 1.6 mn t. However, only around 1 mn t was harvested, though no precise data is available. Kapshuk hopes that the sunflower seeds will be sent to peaceful regions, mainly in the south of the country in order to economize on expenses for logistics in the process of export.

Sunflower seeds will not be processed on the territory of the Donbas. “Three companies are at a standstill and the operation of the other two is questionable,” says Kapshuk, adding that only the oil-extracting plant in Svatovo (Luhansk oblast) is currently operating. The expert complains that one of the largest plants in the region owned by Cargill is also not operating. The company is planning to work with companies from other regions for the processing of sunflower seeds. In particular, Cargill reached an agreement with HradOliya in Kirovohrad. “They fully loaded Kirovohrad’s company and will be working there. They are also seeking opportunities for processing on conditions of customer-supplied raw materials at other companies,” notes Kapshuk.

Prices will shoot up

The prices of sunflower seeds will continue to rise. Stoyanov says that over the month until the end of the harvesting, the prices of raw materials will grow by another 10%. In the long-term it is difficult to predict the price situation, experts assure, seeing as producers are in no rush to sell their crops due to political and economic uncertainty. “This is because another wave of devaluation of the domestic currency is possible. Then it would become more profitable to export sunflower seeds,” said Stoyanov.

The expert believes that the international market is the main factor influencing the prices of oil-bearing crops, since at an output of 4.3 mn t of sunflower oil, domestic consumption barely reaches 600,000 t.