Oilseed plants in Ukraine are shutting down or switching to rapeseed and soybeans due to a shortage of sunflower seed

Currently, sunflower seed is being processed mainly by plants that secured supply back in March–April. Plants that were not covered with raw material from that period are now either shutting down or switching to processing remaining rapeseed and soybeans. This was reported in an interview with Latifundist.com by Serhii Repetskyi, co-founder and partner of Sunstone Brokers.

“At the current sunflower seed price, there is no processing margin. For many plants, it is actually more profitable to stand idle than to process. When a plant is idle, it still has fixed costs — roughly $9–10 per ton. These include salaries and other fixed expenses,” he said.

According to Repetskyi, under such conditions, operating a plant can result in losses of $20–25 per ton.

“So the simple question is: why generate a loss of $20–25 if you can generate a loss of $9–10 by standing idle? In this situation, shutting down production looks economically more rational for some processors than operating at a loss,” he noted.

There are still small remaining stocks of rapeseed in the country, so processors who do not want to buy sunflower seed at UAH 33,000–34,000/t are switching to rapeseed. In addition, rapeseed oil prices at the Polish border allow processors to operate in the black.

“There is no margin in buying at such prices (sunflower seed, ed. note). Only those plants that have a longer value chain with integrated meat or dairy businesses can afford it,” Repetskyi added.

He also believes that the remaining sunflower seed on the market is mostly held by medium-sized farmers, but they will not hold it for long. The first half of June may become the period of final sales of remaining stocks, ahead of the rapeseed and barley harvest.

Tags: rapeseed, rapeseed oil, Ukraine, sunflower oil, soybean oil, prices, soybean, sunseed