Ukraine keeps the leading positions on the global market of sunflower oil – Ukroliyaprom

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APK-Inform

1877

Ukraine is the top producer of sunflower seed and sunflower oil on the global market. Ukrainian sunflower oil proved itself as the high-quality product on the global market. Despite the achievements of quality and production volumes, there are some adverse factors influencing the trade and purchasing activity on the export market of Ukraine, which are periodically observed. Thus, the CEO of Ukroliyaprom association, Stepan Kapshuk shared his opinion about recent trends of the Ukrainian oilseed market development to APK-Inform Agency.

 

 

 

 

- In November 2017, India raised the import duties for crude sunflower oil to 25%. At the same time, in 2016/17 MY India purchased more than 35% of the product from Ukraine. How will the current situation affect the Ukrainian segment of sunflower seed and its by-products?

Ukraine exports sunflower oil to more than 120 countries. India is one of the main importers of the Ukrainian sunflower oil, which continues showing interest in such purchases in the current marketing year. In September-October of 2017, the export volumes of sunflower oil into this direction tended to growth and totaled 43% of Ukrainian crude sunflower oil, and 39.3% of crude + refined oil from the total amount of export.

We understand, that business community of India is more interested in purchasing of Ukrainian sunflower seed and its processing at their own capacities more than in oil import. We repeatedly heard about it during meetings with Indian businessmen.

However, our position remains invariable and we consider the agricultural raw materials to be processed within the country and to be loaded at own capacities, while the production with high value added (sunflower oil, in particular, the refined packed up) should be exported. It is provided due to the export duties for sunflower seed thanks to which the powerful oil and fat complex is created in Ukraine being one of the main sectors of agrarian production where the balance of economic interests of the state, the agricultural and overworking spheres of production and the internal consumer is established.

Ukrainian sunflower oil is in demand on the Indian market, and we hope on the preservation of our positions. At the same time, there is a desire and opportunities to increase export to India of refined sunflower oil, in particular, packed up and also other types of fat-and-oil products.

Taking into account the increased needs of the Indian market for sunflower oil because of countries’ population growth, there won’t be significant reduction of Ukrainian sunflower oil export to India even with the import duty of 25%.

 

- The bearish price tendency and low demand are observed now in the Ukrainian market of sunflower oil. Besides, the low marginality of sunflower seed processors is noted. What impact will the current situation exert on activity of processors? What is the probability of the work enterprises in "the black market" in the created conditions?

The situation over the oilseed market of Ukraine currently causes some concern of the enterprises in fat and oil industry. The agrarians, referring to the cancellation of a simplified tax system, try to realize sunflower seed mainly for cash. It distorts the situation in the oilseed market significantly, leads to it’s shadowing, limiting sales of sunflower seed or to it’s processing on conditions to be provided.

The state budget falls short of hundreds millions of hryvnias in the form of tax payments from conscientious taxpayers, suffering from the influence of shadow market. The transition of over then 30% of volume’ production to the shadow market leads to cardinal changes in balance of supply and demand, that in turn, resulted in increased competition between processors, falling profitability of conscientious processors who honestly pay taxes. As a result, an essential falling of oil and fat branch benefit is observed, as well as the reduction of tax revenues in the state budget and decreased investment attractiveness of Ukraine.

 

- Whether the sellers of crude sunflower oil will reduce the sales volumes in favor of boosting the production of refined oil due to unfavorable price conjuncture in the market?

We are interested in the increased production and export of the refined sunflower oil, in particular of packed one.

Thus, in 2016/17 MY the growth of production and export of the refined sunflower oil exceeded 130%  and 160% respectively in comparison with 2015/16 MY.

The main import countries of the refined sunflower oil recently were Malaysia – 16.3%, Egypt – 13%, the EU countries – 11.7%, the UAE – 10%, Lebanon – 7.2%, Jordan – 5.1%, Belarus – 4.5%, China – 4.1%, Palestine – 2.8%, Israel – 2.1%, the USA – 1.2%.

 

- The domination of Russia on many sales markets of sunflower oil, adjacent to Ukraine, is observed in the first months of 2017/18 MY. In Your opinion, what impact will the decreased volumes of Ukrainian sunflower oil supply and its higher cost exert in the current season?

It would be accurately talked about dumping but not domination of the Russian Federation in the global market of sunflower oil due to the reduction of prices by 20-30 USD/t. Considering higher quality of the Ukrainian sunflower oil and also its huge share in global export volumes (56-57%), Ukraine keeps the leader's positions in the world market.

 

- The segment of sunflower meal as well as sunflower oil is characterized by low demand in terms of large number of offers in the internal and export markets. What features would You mark out in this segment in 2017/18 MY?

Low demand for sunflower meal in the domestic market is explained by the reduction of livestock production in Ukraine. A significant amount of sunflower meal was exported to Republic of Belarus. Currently, the market of Belarus begins reorientation to the Russian sunflower meal because it is cheaper, but the Ukrainian one is also in demand. The quality of the Ukrainian sunflower meal is high and the potential consumers know it. The Ukrainian producers are mastering the new markets, the export geography is constantly extending, and, considering the competitiveness of the Ukrainian meal, the demand in foreign markets is growing.

 

- How far is the export of the Ukrainian sunflower meal to China perspective? (Considering the fact that some companies have permission for shipment of this product to the People's Republic of China).

The People's Republic of China is the perspective direction for us. It is the huge market. The livestock and poultry production is highly developed therefore the Ukrainian producers of a sunflower product are very interested in it. Now producers with heavy responsibility prepare the first consignments of the Ukrainian sunflower meal for shipment to the People's Republic of China and hope that the high quality of the Ukrainian production will be appreciated. Our sunflower meal will be very marketable in China, and it’s import interest will increase.

 

- Producers of Ukrainian soybean and rapeseed oils report about decreased volumes of export to China in 2016/17 MY. In Your opinion, what is the production export potential of these oils?

We are interested in upgrading of production and export of soybean and rapeseed oils. However, their production is limited in Ukraine due to mass export of agricultural raw materials (soybeans and rapeseed).

During recent years, the processing capacities of oilseeds have considerably grown in Ukraine.

Thus, soybeans processing capacities have reached 4 mln tonnes per year and rapeseed – nearly 2 mln tonnes. However, their load doesn't exceed 14-20% because of high export of soybeans and rapeseed. Annually around 5 mln tonnes of oilseeds is exported from Ukraine, in particular, 2.9 mln tonnes of soybeans and nearly 2 mln tonnes of rapeseed. The processing of these agricultural raw materials at our own capacities would provide the increase of production and export the products with high value added, creation of additional jobs, growth of government receipts and also the reduction of social tension in society.

At the same time, it should be noted that soybeans and rapeseed by-products, namely soybean and rapeseed oils as well as meal are in a high demand on the global market.

The main importers of soybean oil are Poland – 35%, China – 29.8%, India – 15.6%, while the main buyers importers of rapeseed oil are EU and China, having 95% and 3.5% from the total export volumes of Ukraine.

We have an opportunity to increase volumes of export to other countries of the world also.

 

- And in conclusion of our conversation share, please, Your vision of the fat-and-oil development of Ukraine in general.

Achievements of the fat-and-oil complex of Ukraine include the developed infrastructure: elevators, the powerful modernized enterprises, logistics, seaports. The main our advantage is the powerful export potential of sunflower oil and meal that allows Ukraine to take the leading positions in the global market and to maintain dynamics of continuous development.

The important condition of further stable development of fat and oil complex of Ukraine is the preservation of export duty on sunflower seed and a flax as well as the creation of appropriate conditions for the high processing of rapeseed and soybeans at the domestic enterprises by introduction the export duty or non-reimbursement of the VAT.

 

Interviewed by Viktoria Zelenaya, APK-Inform Agency

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