According to preliminary estimates by APK-Inform, about 4.48 mln tonnes of sunflower seed were processed in Ukraine for 4 months of 2022/23 MY, which was the minimum since 2015/16 MY.
Crisis in the country's energy sector, limits on the use of electricity and deliberate delay in the inspection of vessels in the “grain corridor” by Russia’s side at the JCC that slows down shipments of sunflower oil are the key factors limiting the processing of sunflower seed.
A total of 10.4 mln tonnes of sunflower seed can be processed in the country in 2022/23 MY, which is 10% less than the previous season.
The export of sunflower oil in 2022/23 MY may decrease by 8% compared to the previous season and amount to 4.15 mln tonnes (minimum since 2015/16 MY).
The export of sunflower seed is as a separate factor affecting the processing of the oilseed and the export of sunflower oil in the current season. In September-December 2022/23 MY, almost 1.2 mln tonnes were exported from Ukraine, which was half of the APK-Inform forecast for the entire season.
"This indicator is atypically high for the industry. It results in significant strengthening of the competition for the oilseed, increase in sunflower seed prices even when the bid price of sunflower oil decreases and leads to sharper reduction in the supply of sunflower seed on the market", – the agency's analyst Svitlana Kyrychok noted.
However, she added that the situation in the energy sector and the expiration of the “grain deal” in March requiring new prolongation would not allow the processing volumes to increase sizable in February-March. That is, at this stage, the high rate of sunflower seed export compensates for moderate processing, and the liquidity of the oilseed for farmers remains almost at the pre-war level.
"However, in the long term prospect, such changes to the supply and demand balance may have negative consequences for the Ukrainian processing industry", – the expert summarized.
