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December 2 2017, 16:40 Source: APK-Inform Views: 1341

Expert estimations of the quality of sunflower seed of the harvest-2017 in Ukraine

 

According to recent forecasts, in 2017/18 MY Ukraine will produce somewhat lower harvest volumes of sunflower seed compared with the last year level, due to lowering of estimations of the planted areas, as well as worsening of the oilseed qualitative indicators.

So, the deficit of moisture content in the soil during ripening processes contributed to decreasing of the yield and oil content of sunflower seed.

In the current article, market participants from the main regions-processors of the oilseed reported their opinions about the impact of the above-mentioned indicators on sunflower seed harvest, interesting market trends, and future development of the market segment.

 

APK-Inform asked the following hot-seat questions to sunflower seed processors:

  1. How do You estimate the qualitative features of new crop sunflower seed, and how it differs from the last season figures (oil content, yield, impurity content, moisture content)?
  2. Did the decline in sunflower seed quality (low natural weight, oil content) affect the price situation in the market segment?
  3. In the season-2017/18, Ukraine somewhat decreased the planted areas under sunflower seed and showed low yield. How did the competition rates develop in formation of the raw materials base?
  4. In Your opinion, how will the situation on sunflower seed market develop in the first half of the current season?

 

Sunflower seed production in Ukraine *

 

2016

2017

Planted areas, `000 ha

5905

5943

Yield, t/ha (as of 1.10.17)

2,28

2,02

Production, `000 tonnes (as of 1.10.17)

8998

8620

* Hereinafter: sources - State Statistics Service of Ukraine, APK-Inform estimations

 

Southern region

Planted areas in 2017, `000 ha

1 860

Yield, t/ha (as of 1.10.17)

1,67

Production, `000 tonnes (as of 1.10.17)

2 557

Share of the region in sunflower processing

47%

 

To date, it is obvious that in the southern region of Ukraine there is observed a clear reduction of the harvest volumes and yield of sunflower seed. Also, the qualitative features of raw materials declined. In particular, according to the State Statistics Service of Ukraine as of 01.10.2017 Kherson oblast demonstrated a significant decreasing of the yield figures, to 1.37 t/ha, against 1.73 t/ha in 2016/17 MY. Therefore, the production volumes in the oblast reduced to 375 thsd tonnes, against 501 thsd tonnes of last year. But despite the declining yield figures in Zaporizhia oblast, the production volumes exceeded the last season level, and reached 739 thsd tonnes (671 thsd tonnes in 2016/17 MY). Despite high rates of the harvesting campaign in Zaporizhia oblast compared with the last year figures, the production volumes will also decline, due to some reduction of the planted areas and lowering of the sunflower yield figures.


 

Oblast

Planted areas, `000 ha

Yield, t/ha (as of 1.10.17)

Production, `000 tonnes (as of 1.10.17)

2016

2017

2016

2017

2016

2017

Zaporizhia oblast

579

561

1,63

1,57

671

739

Mykolaiv oblast

533

515

2,07

1,66

783

641

Odessa oblast

459

437

2,25

2,01

845

803

Kherson oblast

371

347

1,74

1,37

501

375

 

 

Andrei Bolgov, Deputy Commercial Firector on purchases at Pology Oil Extraction Plant PJSC (Zaporizhia oblast)

  1. In the current season, the harvest of sunflower seed is significantly different compared with the production volumes in many previous years. Of course, it is subject not only to qualitative indicators, but also to a number of the oilseed supplies on the market as a whole, due to declining of the yield figures. So, as of the end of October the average yield in Ukraine reduced by 0.23 t/ha, and in quantitative terms in the whole country it caused the losses of nearly 1.4 mln tonnes of sunflower seed.
  2. In the southern regions of the country, the oil content of raw materials rarely exceeds 44%. Therefore, many plants are forced to either discount the prices, or slow down their purchasing rates of sunflower seed.
  3. Due to low oil content of sunflower seed, our plant revised the production plan towards reducing of the processing volumes. We plan to increase the loading capacities at the expense of the growth of soybean processing volumes to 100 thsd tonnes.
  4. In the nearest future, the prices will start rising due to the high competition fight for oilseed raw materials.

 

Central region

Planted areas in 2017, `000 ha

1 925

Yield, t/ha (as of 1.10.17)

2,2

Production, `000 tonnes (as of 1.10.17)

3 075

Share of the region in sunflower processing

36%

 

 

In the current marketing year, the qualitative and quantitative indicators of sunflower seed production became much lower compared with last season. At the same time, there are several exceptions by oblasts. For example, in Dnipropetrovsk oblast the yield figures declined, but the harvest volumes increased to 843 thsd tonnes in comparison with the last year, by expanding the oilseed planted areas.

 

Oblast

Planted areas, `000 ha

Yield, t/ha (as of 1.10.17)

Production, `000 tonnes (as of 1.10.17)

2016

2017

2016

2017

2016

2017

Dnipropetrovsk oblast

599

609

2,04

1,9

709

843

Kirovohrad oblast

570

556

2,31

2,04

843

782

Poltava oblast

312

311

2,71

2,36

687

622

Vinnytsia oblast

264

246

3,07

2,88

682

426

Cherkasy oblast

203

204

2,77

2,54

440

402

 

 

Igor Yakymchuk, Director at Krasnohirsky oil plant LLC (Cherkasy oblast)

  1. In the current season, in the central region the oil content and yield figures of sunflower seed somewhat declined . The market mainly faces the supplies of oilseed raw materials with low oil content at 42-44%. Higher figures of oil content (48-49%) are very rare, not more than 40% of all incoming raw materials.

At the same time, the share of sunflower seed with high impurity content started increasing. To date, households usually have good technical equipment which brings the impurity content level to nearly 3%. We prefer buying sunflower seed for processing works, with the impurity content not exceeding 1.5%.

Also, the share of immature and shrinked sunflower seeds significantly increased compared with the last year figures.

  1. To date, sunflower producers are slowing down the oilseed sales, waiting for the growth of prices and increasing of competition rates for raw materials. We are not competitive in the reporting situation, as many factories are paying higher prices for large-scale supplies of raw materials than the market prices, despite the available qualitative figures of the oilseed. Most farmers with large stocks of the oilseed expect for continuation of the bullish trend, and do not hurry to sell the raw materials.

In such circumstances, many oil-pressing enterprises will fail to run at full capacity because they will not be able to compete with oil-extraction plants.

  1. I think the sellers will hold down the major volumes of the raw material until the end of 2017. At the same time, those agrarians who need to buy fertilizers and agricultural machinery, will sell small-scale batches of sunflower seed. Also, the special VAT regime will have a strong influence on the market.
  2. There are no reasons for declining of prices for the oilseed: sunflower seed volumes are much smaller, and its quality is much worse compared with last season. The bullish trend will continue developing on the market, and we will probably fail to compete with other companies. In order to minimize the losses, our factory will either stop its production, or work with partial loading capacities.

 

Eastern region

 

Planted areas in 2017, `000 ha

1 159

Yield, t/ha (as of 1.10.17)

1,9

Production, `000 tonnes (as of 1.10.17)

1 598

Share of the region in sunflower processing

12%

 

 

Also, in the current season the eastern region demonstrated some decline in the qualitative figures of sunflower seed. Agricultural producers reported about decreasing of the yield and production volumes of the oilseed. According to the State Statistics Service of Ukraine, the average yield in the region totaled 1.92 t/ha.

 

Oblast

Planted areas, `000 ha

Yield, t/ha (as of 1.10.17)

Production, `000 tonnes (as of 1.10.17)

2016

2017

2016

2017

2016

2017

Kharkiv oblast

467

472

2,67

2,21

628

806

Luhansk oblast

323

355

2,02

1,68

294

379

Donetsk oblast

322

332

1,84

1,72

312

413

 

 

Kirill Svyatenko, Commercial Director at PE Agro-Trade (Kharkiv oblast)

  1. The qualitative figures of sunflower seed significantly reduced in the beginning of the harvesting campaign. The major supplies of raw materials demonstrated the oil content at 37-39%, as opposed to 46-50% last year. By the end of October, the quality situation somewhat aligned, and the average oil content in the raw materials totaled 45-46%. In our region (Kharkiv oblast, Izium raion), the yield figures in 2017/18 MY were somewhat lower than last season, and totaled 1.8 t/ha (2.2 t/ha last year). Impurity and moisture content figures remained at the 2016 level.
  2. In the current season, the prices for sunflower seed became higher compared with the same date last year. In the beginning of 2016/17 MY, the prices for oilseed raw materials developed at 9`800 UAH/t under delivery terms СРТ-elevators of Kharkiv oblast. In 2017/18 MY, the prices started working from 10`000-10`100 UAH/t СРТ. To date, the purchasing prices grew to 10`300 UAH/t under the same terms. I think it's not a limit of the price growing for the oilseed.
  3. Competition rates for raw materials on the market is more than considerable. Despite some decline of the planted areas and yield figures, the average Ukrainian farmer became even more advanced and financially backed, he can even build a storehouse and postpone the sales of sunflower seed until better days in his opinion. To date, many large-scale Ukrainian companies-processors of sunflower provide rather aggressive purchasing policies, and are fighting for any volumes of the oilseed, even if there are a few hundred tonnes only. Therefore, the current season will be rather difficult.
  4. I think that agrarians will slow down the sales of sunflower seed, and in turn companies-processors will pay no regard to the economy and purchase any volumes to form the raw materials base and to secure themselves for possible future idle periods. But the season can be fatal for small-scale oilseed processors (oil-press plants and small-scale extraction plants).

 

Northern region

 

Planted areas in 2017, `000 ha

649

Yield, t/ha (as of 1.10.17)

2,55

Production, `000 tonnes (as of 1.10.17)

1 033

Share of the region in sunflower processing

3%

 

 

In the beginning of the harvesting campaign, many oilseed producers in the northern region feared a possible reduction of sunflower seed yield due to adverse weather conditions (rains) observed at the end of September 2017. But according to the State Statistics Service, the yield of sunflower seed in the region did not significantly change compared with last year, and totaled nearly 2.55 t/ha. Oilseed processors reported that the qualitative indices of sunflower seed declined in rather modest way.

 

Oblast

Planted areas, `000 ha

Yield, t/ha (as of 1.10.17)

Production, `000 tonnes (as of 1.10.17)

2016

2017

2016

2017

2016

2017

Sumy oblast

193

196

2,50

2,68

341

357

Chernihiv oblast

206

191

2,68

2,62

334

300

Kyiv oblast

161

161

2,81

2,38

330

265

Zhytomyr oblast

84

100

2,69

2,45

144

111

 

 

Oleg Voloshchuk, Deputy Director at PJSC Nizhynsky fat-and-oil complex

  1. The yield of sunflower seed in our region (north-eastern part of Ukraine) remained at the same level as last season - nearly 2.7 t/ha. In large-scale agrarian holdings, the figures are slightly higher - nearly 3 t/ha, in medium- and small-scale households - nearly 2.5 t/ha. The moisture content became slightly higher compared with last year - nearly 10-12%, due to heavy rainfalls in October.
  2. In 2017, the natural weight of sunflower seed in our region remained at the previous level - nearly 400 g/l, and the oil content declined by nearly 1% - to 48%. Only several farms from Poltava oblast provided the raw materials with high oil content, reaching 52%.

In the beginning of the season-2017/18, there were announced even higher prices for the oilseed than last season - at the level of 10`100 UAH/t taking into account the delivery costs, and in relatively short period the prices increased to 10`500 UAH/t.

In September, oilseed processors kept the prices within 10`100-10`200 UAH/t. But large-scale agrarian holdings, which always need sunflower meal and cake stocks to produce mixed feed, purchased sunflower seed at the higher prices, which reached 10`600 UAH/t, taking into account the delivery costs.

  1. In the current year, the plants of the southern region were not afraid of the competition fight, they purchased the oilseed from a distance of 500-600 km in the regions of other plants, because the economy shows that it is more expensive to work at underloaded capacities - it is foregone earnings.
  2. In my opinion, in the nearest month the prices will vary within 10`500-10`700 UAH/t, unless the USD/UAH exchange rates grow again. If the exchange rates increase, the oilseed prices will immediately respond to such developments. I don't see any trends for price reduction.

 

Western region

Planted areas in 2017, `000 ha

351

Yield, t/ha (as of 1.10.17)

3,05

Production, `000 tonnes (as of 1.10.17)

357

Share of the region in sunflower processing

2%

 

 

According to the State Statistics Service, in the western region there is observed the highest yield of sunflower seed in the current season - 3.05 t/ha. Also, most market participants noted the high level of oil content, aided by favourable weather conditions in the form of rains during the period of sunflower ripening.

 

Oblast

Planted areas, `000 ha

Yield, t/ha (as of 1.10.17)

Production, `000 tonnes (as of 1.10.17)

2016

2017

2016

2017

2016

2017

Khmelnytskyi oblast

113

146

3,01

3,21

256

200

Ternopil oblast

55

79

2,84

3,04

80

68

Lviv oblast

27

35

2,70

2,74

39

13

Ivano-Frankivsk oblast

22

32

2,42

3,05

24

19

Rivne oblast

14

24

2,92

2,95

16

13

Chernivtsi oblast

20

17

2,38

2,71

28

32

Volyn oblast

6

16

2,72

2,50

9

9

Zakarpattia oblast

3

3

2,15

1,77

3

2

 

 

Marian Kuspis, Head of the purchasing department at PE Oliyar

  1. Our plant works with sunflower seed processing for the second season only, but it is clear that the oil content in the current MY is higher compared with last season, up nearly 1-1.5%. In 2016/17 MY, we purchased 60 thsd tonnes of sunflower seed, which average oil content totaled nearly 47%. In the new season, the same volumes of the oilseed demonstrated the average oil content at 48.5%. Lviv, Volyn, Rivne and Zakarpattia oblasts showed the highest oil content figures, Lviv and Rivne oblasts - good yield figures. Moisture and impurity content remained at the last year level.
  2. To date, our plant already purchased 80 thsd tonnes of sunflower seed, and the quality of raw materials is higher compared with last season. It mainly concerns to the bulk weight and oil content. All indicators in our region are much better than last year. At the same time, other oblasts of Ukraine demonstrated some decline in qualitative features, resulting in the growth of prices for sunflower seed in our region.

3. In the western region, there is a clear trend of increasing of sunflower seed areas every year, due to development of rather significant competition, as well as yield figures have a good level. Of course, increasing of the capacities in most of Ukrainian oil-processing plants influences at the price policy. But our plant is multi-crops processing enterprise, and we are able to process several varieties of oilseeds, thereby the risks of a deficit of raw materials is not so significant for us. In the current season, we need 150 thsd tonnes of sunflower seed for processing works, and declining of the yield figures in certain oblasts have a very little impact on formation of the raw material base by our enterprise.

  1. Every year, the prices for sunflower seed start decreasing during the harvesting period. But in the current season, there was no such trend, but on the contrary, there is a bullish trend. At the end of the harvesting campaign, most sunflower seed volumes will move to elevators, and its cost will somewhat increase. And in terms of the large-scale marketing plans of the large oil-extraction plants, the prices for sunflower seed will be high during the whole season.

 

In conclusion, it is important to note that expansion of the planted areas, as well as the higher quality of raw materials in the western and northern regions of Ukraine, does not exclude the possibility of a significant growth of competition rates in the reporting regions.

In the current terms, we can specify the following factors in formation of sunflower oil prices:

  • decreasing of the yield figures and lower quality of sunflower seed will provide additional stimulus to the growth of bid prices;
  • reduction of the loading capacities (in terms of high competition rates and growing price dynamics, many plants will not be able to work at full capacity).

Thus, 2017/18 MY is expected to be rather difficult period for many oilseed processors. Market operators even expect for reduction of the marginality and attractiveness of the oilseed processing.

 

Prepared by Elena Emanova, APK-Inform Agency

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