Ukrainian processors lower sunflower prices and ask for an increase in the export duty

Uncertainty with the work of the grain corridor after November 19 prevents producers from planning the volumes of sunflower processing in Ukraine, so they are forced to lower their purchase prices.

At the same time, sunflower export prices are rising again, which increases export volumes, so processors are worried about whether they will have enough raw materials for the stable operation of enterprises by the end of 2022/23 MY, especially given this year's reduced harvest.

One of the beneficiaries of the GradOlia company proposed to create a working group with the participation of representatives of the Ministry of Agriculture and Ukroliyaprom to work out the possibility of increasing the duty on sunflower exports from 3.5% to 10% in order to sell high-yield oil, not raw materials.

A reduction in the sunflower harvest to 9-10 million tons (compared to last year's 17 million tons) will leave Ukraine without jobs and foreign exchange earnings, the company says and calls on the Ministry of Agriculture to stimulate the processing of sunflower oil in Ukraine, as well as its cleaning and packaging before sale.

Currently, sunflower purchase prices remain at a low level of UAH 14-15 thousand/t or $385-410/t with delivery to the factory against the background of low sunflower oil prices and uncertainty with meal deliveries to ports. But the growth of demand and export prices from the EU is turning sunflower supplies towards the borders.

For sunflower with delivery to Romania, Hungary and Bulgaria, they offer $560-580/t, which allows exporters to pay UAH 14,000-14,500/t on the basis of FCA-farming, provided transport costs are within UAH 4,500-5,500/t, payment of export duty 3 .5% and receiving VAT compensation for export, while having insignificant profits.

Since the beginning of the war, Ukraine has exported 1.7 million tons of sunflowers, which allowed farmers to get at least some funds for field work during the downtime of processing plants. At the same time, Bulgaria purchased a record 500,000 tons of domestic sunflower. In the current season, despite the increase in the sowing area, Bulgaria will harvest 2-2.1 million tons of sunflower, which will correspond to last year's level, so it is interested in increasing the volume of sunflower imports and processing from Ukraine.

In Ukraine, as of October 21, 7 million tons of sunflower were threshed from 68% of the area or 3.2 million hectares with a yield of 2.19 tons/ha, so the total harvest will not exceed 10 million tons.

Demand prices for sunflower oil remain at a low level of $1000-1050/t with delivery to the port or $1150-1200/t with delivery to Poland or Bulgaria. Demand prices for sunflower meal recovered to the level of $150-180/t with delivery to the port and $250-300/t with delivery to EU countries.

In the Russian Federation, precipitation delays harvesting, so 8 million tons of sunflower were harvested from 4.4 million hectares with a yield of 1.8 t/ha, while last year 12.7 million tons were threshed from 7.9 million hectares with a yield of 1.62 t/ha. Local agencies lowered the harvest forecasts from 17 to 16-16.4 million tons, which will still exceed last year's figure due to the increase in the sowing area.

The active export of sunflower oil from the Russian Federation puts pressure on the prices of Ukrainian oil, which is already sold at a large discount due to the high cost of freight and insurance for ships calling at the Black Sea ports of Ukraine.