Скачать или смотреть The Ukraine Sunflower Industry - Whats Going On?

The Ukraine Sunflower Oil Industry - What's Going On?

Ukraine is normally the world’s top producer of sunflower products such as meal, oil, and seed and the world’s top exporter of sunflower meal and oil.

Sunflowers are sown in April and May, with harvest typically beginning in September. Production is primarily concentrated in the eastern and southeastern regions of the country.

Ukraine projects that in 2022/23, they can become the world’s third-largest sunflowerseed producer after Russia and the European Union, as production is expected to be down reduced reflecting the affects of the war.

The country has been a top producer of sunflower seed since 2008.

Ukraine normally produces one-third of the world’s sunflower oil and accounts for nearly half of global exports; however, in the coming year from now, Ukraine’s share in global oil production and exports is projected to shrink to 21 and 35 percent, respectively.

Top markets in 2021 were India (31 percent), the European Union (30 percent), and China (15 percent). Ukraine normally supplies nearly two-thirds of the world’s sunflower meal, with exports valued at $1.2 billion in 2021.

For 2022/23, Ukraine’s share of global exports is projected to decline to 40 percent. Top markets in 2021 were China (48 percent), the European Union (25 percent), and Turkey (7 percent).

The war hasn't affected the production of edible oils at all this year. But as we know, the prices for sunflower oil back in May, went as high as $2,300MT without shipping costs included.

We musn't put all the blame on the war though, the prices started rising above average due to covid restrictions between 2020 and 2021.

Now those prices have come down and are much more reasonable.

Currently, crude sunflower oil in Ukraine is $1,150MT FCA. Shipping is calculated and paid sepeartely.

With Europe being the preffered market due to the high cost of international freight shipping.

With the majority of Buyers requesting CIF, it is possible, but must be discussed first.

Buyers can arrange their own vessels for colloction. Or, the producer in Ukraine can assist, with the shipping cost paid directly to the freight company.

But why did the prices go up?

The war has resulted in higher prices for energy commodities like natural gas, which in turn, affected the production of fertilisers.

Nitrogen-based fertilisers are the largest group.
Their production process starts by mixing nitrogen from the air with hydrogen from natural gas, at high temperature and pressure to create ammonia.

About 60% of the natural gas is used as raw material. The other 40% powers the synthesis process.

Prices of inputs like fertiliser have increased, but so too have prices of vegetable oils. This may help make up for the higher production costs.

Still, individual small farmers may be struggling because of high fertiliser prices. Some governments are trying to support their farmers.

In Kenya, for example, the government has received a loan from the African Development Bank. This is meant to “support food security efforts amid rising cost of inputs and prevailing drought”.

It is being used to give farmers subsidised access to fertiliser.

To reduce their need for synthetic fertiliser, some farmers are planting alternative crops that need less fertiliser. For example, groundnuts instead of maize.

Another alternative that is being looked at in some developing countries is organic fertiliser, such as manure.

Payment Terms in Ukraine

Nobody can accept LC for edible oil in Ukraine. The reason for this, is the farmers mostly. They do not accept LC, and require a deposit between 20 to 30% paid by TT.

Another reason no supplier will accept TT, is logistics. Freight companies give 2-3 days to pay.
For every delay with payment, there is a $25k fine, and with LC's taking between 5-10 days to deposit it a Sellers account, it's too much of a risk.

Shipping by truck to Europe also requires TT payment. There is a huge demand for trucks, and they must be booked in advance.

So when dealing with a Ukranian company for anything, don't just assume they are scammers. Just make sure you do all the due diligence you can.

For example: We offer a site visit before making payment. So very safe for any customer looking to purchase sunflower oil at our extraction plant.

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