Melitopol Oil Extraction Plant – good stocks of sunflower seed

Source

APK-Inform

3016

A new season for sunflower seed market will become a season of new records, including possible growth of the production volumes by more than 16%. Also, demand rates on the domestic market continue steadily growing, and therefore, we observe a gradual growth of prices for sunflower seed, which is contrary to the trends of sunflower oil market segment.

The founder of Melitopol Oil Extraction Plant LLC and the group of agricultural companies, Sergey Zhelev told APK-Inform journalists about the tendencies and characteristics in the beginning of 2016/17 MY, and prospects for the market of sunflower seed and its by-products in the new season.

 

Background

Melitopol Oil Extraction Plant LLC started its work in 1934. The daily production capacities of the plant total nearly 550 tonnes of sunflower seed.

The main directions of the company business activity is the production of forepress and extraction sunflower oil, refined deodorized sunflower oil, bottling of oil, production of granulated sunflower meal, sunflower husk pellets, as well as exports of the reporting goods.

 

- Sergey, Your company operates in many spheres of the agro-industrial complex. At the same time, I would like to talk in more details about the market of sunflower seed and its by-products. What difficulties does Your company usually face during formation of the raw material stocks?

On August 16, Melitopol Oil Extraction Plant LLC resumed its work after the scheduled maintenance works. We started the production process using oilseed raw materials of the harvest-2016 and worked at just-in-time system. Our enterprises started the harvesting campaign in an uneven manner, and the weather conditions had its negative effect (rains). Taking into account the deficit of oilseed raw materials, agricultural producers started to hold down large-scale batches of sunflower seed. Therefore, sometimes it is necessary to purchase raw materials at relatively high prices. Also, we faced a severe shortage of vehicles, and sharp rising of transportation costs. Also, we had a shortage of transport, rail cars, road tank vehicles, etc. during selling of the finished products. We would like to receive some assistance from the Government in the VAT refund issue. Delays in the tax refund cause some reduction of the working capital and decrease running efficiency of the enterprise.

 

- How do You estimate the qualitative parameters of new crop sunflower seed?

We are completely pleased with the quality of oilseed raw material of the harvest-2016. The oil content became much higher compared with several previous seasons. We had low level of raw materials supplying from the eastern regions of Ukraine, and its high moisture content level, but we solved the problem through additional treatment at our elevators.

 

- Taking into account the ever-increasing competition for oilseed raw materials, do You work at the program of partial financing of farmers, or realize forward purchases of raw materials? Did Your company have such experience in previous years, and how does the program do good work?

We do not realize mass forward purchases of oilseed raw materials. We provide partial financing of farmers only. There are both positive and negative experiences of such funding: we faced with non-performance of obligations from several agricultural enterprises, and are forced to communicate with them in a judicial proceeding procedure.

 

- As far as we know, Your company works with processing of high-oleic sunflower seed. Would You tell us about the business sphere in more details? What is the average premium for high-oleic sunflower seed and sunflower oil in the current season?

Our company has significant experience in growing, purchasing and processing of high-oleic sunflower seed. We are one of the TOP-5 processors of high-oleic sunflower seed in Ukraine. In 2013/14 MY, the price premium for high-oleic oil reached 300-400 USD/t. We paid a premium at 45-100 USD/t for some batches of oilseed raw materials. In the season-2015/16, the situation completely changed. Number of companies-processors increased, and the number of high-oleic oil offers increased respectively, but the demand decreased, on the contrary. The price premium for raw materials decreased from 50-60 USD/t to 20 USD/t. The season 2016/17 started with the premiums for high-oleic oil at 30-50 USD/t, but to date the premium for seeds fell to 10 USD/t.

 

- How did the demand for high-oleic sunflower oil changed during several recent years, and who is the main buyer of the product? What are the prospects for market development, in Your opinion?

I think that the demand for high-oleic oil and seeds will increase, due to lowering of prices for the final product and the growing popularity of the product. The premium for high-oleic oil and seeds will continue keeping, but the level of 100-200 USD/t will completely disappear. Our main customers are located in Asia, Europe and North America. I am sure that the product will be in demand in Ukraine due to its continuing popularization. In 2016, we launched the shop for refining and deodorization of the vegetable oil, and the packaging line. We produce and sell high-oleic press oil and high-oleic refined and deodorized oil.

 

- Sales of the products (oil/meal) mainly develop on the domestic or export market, but what direction is the priority for the company? What is the export geography for the products, and what countries do You plan to enter in the nearest future?

Our company exports 80% of the finished products. Sunflower oil takes 10% of the global market of vegetable fats. It is required to promote the product as "healthy". We are monitoring a constant increase of its demand in China and India, and ship the product to the countries in flexi-tanks. We started sunflower meal shipment in containers to India. We hope to finally solve the issue with sunflower meal exports to China. Melitopol Oil Extraction Plant already passed the inspection commission, and is ready for sunflower meal delivery to China. We are negotiating to supply high-oleic oil to South Korea and Japan.

 

- In Your opinion, how will the market of sunflower seed and its by-products develop in the first half of the season?

There will be no difficulties with purchases of oilseed raw materials until the New Year. Many companies formed the required stocks of the oilseed. Agrarians produced rather large-scale harvest of sunflower seed. Traditionally, the supply of sunflower seed will somewhat fall during the New Year holidays. If there are no USD/UAH fluctuations, the prices will somewhat decline.

 

Interviewed by Elena Emanova, APK-Inform Agency

Advertising

Enter