Restoration of processing plants supports sunflower prices in Ukraine

Against the background of Russia’s military aggression against Ukraine, most processing plants were shut down, but in April enterprises in the western regions began to resume operations. At the end of May, sunflower processing was resumed by plants in the center and even the south of Ukraine, as raw material prices fell sharply, allowing companies to obtain high processing margins. Some plants provide processing services at a price of $ 80,150 / t, while others purchase sunflower at UAH 15,000-16500 / t ($ 512-565 / t), receiving a processing margin of up to $ 200 / t.

Active exports of Ukrainian sunflower to Romania, Bulgaria and Turkey have raised prices from an extremely low level of 13000-14000 UAH / t to 14500-15000 UAH / t FCA. Now processors are actively buying sunflower against the background of disappointing production forecasts for next season.

Experts of the Ukrainian Grain Association predict that in 2022 the sunflower harvest in Ukraine will decrease compared to the previous year from 16.9 to 9 million tons, which will lead to a shortage of raw materials and shutdown of some plants.

Significant stocks of sunflower from producers and processors will continue to put pressure on prices for some time to come, but prices will rise as supplies of processed products increase. At present, it is difficult for processors to sell meal and cake to European consumers due to rising logistics and falling prices in the EU amid rising supply of Ukrainian products. At the same time, producers are in no hurry to sell sunflowers at low prices, expecting an increase in production costs in the new season.

Rising prices for palm oil and low rates of oil shipments from Ukraine due to logistical problems have halted the fall in EU demand for sunflower oil at $ 1450-1650 / t DAP.

Malaysia’s palm oil futures rose 2% to 6,356 ringgit / t or $ 1,450 / t in two sessions, but soybean oil futures on the Chicago Board of Trade remained at $ 1,720 / t.

Following the EU decision to impose an embargo on Russian oil, oil prices rose sharply, but fell by 5-6% yesterday compared to the previous week, including Brent oil – up to $ 115.5 / barrel amid discussions between OPEC countries + opportunities to increase production to replace Russia’s share in the production agreement. However, Russia will supply its oil to the markets of China and India, albeit at a large discount, so total supplies will increase.