The growth of sunflower purchase prices in Ukraine is limited by the low processing margin and the drop in oil prices

Increased demand for sunflower from processors who increased production and export of sunflower oil led to higher purchase prices as farmers refused to sell seeds at low prices.

During the week, demand prices increased by UAH 500-600/t to UAH 12,500-13,200/t with delivery to the plant. Against the backdrop of increasing supplies through Black Sea ports, prices at factories in the south of the country rose more than in the center and west.

The margin of sunflower processing without taking into account the cost of processing has decreased to an annual minimum of $50-60/t, subject to 100% VAT reimbursement, which does not allow processors to raise prices. Some MEZs are resuming the processing of more profitable rapeseed.

According to shareuapotential, in the new season, Ukraine reduced sunflower oil exports by 20% compared to the previous year, from 963 to 764 thousand tons, in particular in October - from 454 to 407 thousand tons, which is 50 thousand tons higher than in September 2023. In general in 2022/23 MR, the export of sunflower oil amounted to 5.6 million tons.

Export demand for sunflower remains low due to the blocking of supplies to neighboring EU countries and rising shipping costs, but in October it increased to 30,000 tons. Demand prices are $365-380/t DAP-Romania port and $390-400/t DAP -Bulgaria. Licensing requirements for sunflower exports to these countries may soon halt supplies.

The drop in oil prices by 4-4.5% against the backdrop of China's worsening macroeconomic indicators increases the pressure on the prices of vegetable oils, the demand for which continues to decline (yes, India reduced imports by 30% in October).

December palm oil futures on the Malaysian exchange yesterday fell 0.9% to 3,720 ringgit/t, or $797/t, while December Chicago soybean oil futures fell 2.6% to $1,090/t (-9% per month).

Demand prices for sunflower oil remain at the level of $850-855/t with delivery to buyers, but their growth is restrained by the increase in supplies from the Russian Federation and Ukraine through the Black Sea ports.

On November 2, 11.3 million tons of sunflowers were harvested from 4.8 million hectares or 94% of the area in Ukraine with a yield of 2.37 tons/ha (2.18 tons/ha last year), so the harvest forecast will decrease from 13-14 to 12 .5-13.5 million tons.

In the Russian Federation, thanks to the increase in the area of sowing and yield, the forecasts of soybean production have been increased to 17 million tons.