Bulgaria is introducing a ban on the import of sunflowerseeds from Ukraine until the end of November this year, after which the licensing mechanism will be used for trade operations with this crop.
How will this affect the Ukrainian oilseed market? Let's try to figure it out.
According to preliminary data of IA "APK-Inform", in September of this year sunflowerseeds export from Ukraine amounted to slightly more than 12 thsd tonnes, which was 2 times higher than in August, but still significantly inferior to the volume of September last year (-93%). The main volume was shipped to Moldova (about 41%) and Turkey (31%), and only 4% - to Bulgaria.
We will remind you that last year in September, Bulgaria was one of the main importers of Ukrainian sunflowerseeds - about 74 thsd tonnes were exported in this direction. This same year, as a result of restrictions on the import of 4 agricultural crops (including sunflowerseeds), introduced by 5 EU countries in April last year, this direction remained closed. After the lifting of this ban on September 15, Bulgaria announced that it would not immediately resume the import of Ukrainian sunflowerseeds, in order not to collapse the domestic market, despite the rather high demand for it from Bulgarian processors. However, supply contracts were concluded, and, according to market operators, some shipments in this direction did take place in the two weeks of September.
"At the same time, the recovery in the Ukrainian export market of sunflowerseeds to some extent supported domestic prices, which have already begun to recover after a significant drop at the beginning of the new season. However, domestic processing enterprises remain the main buyers of sunflowerseeds in Ukraine," notes Svitlana Kyrychok, oilseeds market analyst of the APK-Inform Agency.
Thus, export-oriented companies create additional competition in the market, but this is more typical for southern and western regions.
It is worth noting that the oil and fat industry in Ukraine is not the only one that showed positive results in 2022/23 MY, regardless of the export orientation of products. That is, even in the conditions of difficult logistics, suspension of the grain corridor, and constant shelling of the port infrastructure, the processing sector showed a 20% increase y-o-y. Moreover, he may well consume the entire sunflowerseeds crop in the new season-2023/24.
As a reminder, in 2023, an increase in the sunflowerseed harvest is expected in Ukraine, which, according to the APK-Inform, may amount to 13.7 million tonnes (+9% by 2022) and can potentially be fully processed on the domestic market.
Currently, the farmers themselves are not ready to sell at the set prices, and the lack of precipitation since the beginning of harvesting has contributed to the storage of sunflowerseeds without additional costs for drying, as evidenced by the recent increase in demand for storage capacity. Such a trend forces processors to raise bid prices, which is also supported by the increase in the value of sunflower oil on the export market.
In case of an active recovery of exports to EU countries, in particular, Bulgaria, agricultural producers will be in a more favorable position. But the question of when will it happen and how will licensing work remains open for now.
It should be noted, that Turkey, the second after the EU importer of Ukrainian sunflower in 2022/23 MY, from September 18 of this year has launched a reference price for the import of sunflower seeds at the level of 700 USD/t, which will act as a limitation for the shipment of oilseeds in this direction.
Starting from October 2023, according to market sources, to export sunflowers to Moldova permission will be required from the competent Authority of the Republic of Moldova. It is not necessary to take such a permit for transit to other countries.
You can learn more about trends in the Ukrainian oil and fat industry during the XXI International Conference Fat&Oil Industry-2023, which will be held on October 23 in Lviv (Ukraine).