IEG Vu is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. Please do not redistribute without permission.

Printed By

UsernamePublicRestriction
UsernamePublicRestriction

Interview: Ukrainian oilseeds companies search for new markets

Value-added products to increase profitability

This article is powered by The Public Ledger

Lower world prices for oilseed by products such as sunflower oil or soybean meal has reduced the profitability of Ukrainian processors. However, the overall outlook for the industry remains positive.

IEG Vu spoke toYulia Ivanitska, oilseeds analyst at APK Inform, ahead of the 17th international conference "Fat-and-Oil Industry - 2018", to be held on November 6, 2018, in Kiev, Ukraine, about the outlook for the industry.

 

What are the main challenges facing the Ukrainian oilseeds industry in 2018/19? What can be done to address them?
If we talk about trade, the main challenge is the coming enforcement of the cancellation of VAT returns for soybean exporters from September 1, 2018. The rules of trade will change and, accordingly, product flows will be redistributed between market players, and also between supply bases - from FOB to CPT and DAP. In addition, the export volumes will also decline due to a decrease in the soybean supply. The reduction in world prices for oilseed by-products […] negatively affects the profitability of processing. Ukrainian companies are in therefore search of new, more marginal markets, or they are exploring what other products, with more value added, can be produced. They are targeting markets with higher selling prices and premiums. For example, some European countries propose higher prices for non-GM soybeans and SFO (sunflower oil). Organic products are another example.

 

The State Statistics Service reported a sharp drop in sunflower margins in 2017, what do you think caused this? Will this deter farmers from planting sunflowers next season?
As practice shows, the profitability of sunflower production is much higher than official figures, since a large share of the market is “grey”. About 1 million tonnes of sunflower seed a year is sold on the cash market and farmers do not report it to avoid taxes. We estimate it's about 6-8% of the market. In addition, oilseeds have the highest profitability among [field] crops. Sunflowers for Ukrainian agrarians are a lucrative and highly liquid crop. There is always a demand for it. In 2018, the area under sunflower not only did not decrease compared to 2017, but it increased by 200,000-300,000 hectares to 6.3-6.4 mln ha, according to APK-Inform estimates.

 

India has been importing more soft oils like sunflower oil and less palm oil in recent months, do you think this trend will continue now that the government has raised import duties for soft oils?
The increase in import duties on [sunflower] oil in India did not lead to a reduction in its purchases from Ukraine. The Indian side is interested in purchasing quality products. In any case, India is an import-oriented and dependent country in the vegetable oil sector and it will continue buying a lot of oil on foreign markets. Here more depends not on the presence or absence of duties. The volumes of import of sunflower oil by India are inversely related to the Indian SFO price / CPO price ratio: the lower the price ratio, the greater the import of SFO.

 

Ukraine recently started exporting sunflower meal to China, how much has been shipped so far and how big do you think the potential of this market is? Will the US/China trade war have any effect on demand?
From September 1, 2017 to July 23, 2018, Ukraine exported 155,000 tonnes of sunflower meal to China, or 4.3% of the total volume of shipments of this product. Given the size of the market in China, which is also looking for alternative sources of protein oil production in the light of the trade conflict with the United States, there may be great prospects for increasing supplies of oilmeal cake to the country. According to APK-Inform’s forecast, the estimation of export of sunflower meal from Ukraine to China in 2017/18 MY is at 170,000-200,000 tonnes.

 

 

The 17th international conference "Fat-and-Oil Industry - 2018" will be held on November 6, 2018, in Kiev. Participants will enjoy a new format, which combines a conference, mini-exhibition and several industry-specific workshops. Major topics will include, amongst others: the global market of oilseeds, vegetable oils and meals; new markets for Ukrainian crude sunflower oil; and infrastructure and logistics.

 

 

Advertisement

Related Content

Topics

What to read next

Advertisement
UsernamePublicRestriction

Register

CO221349

Ask The Analyst

Please fill in the form below to send over your enquiry or check the Ask The Analyst Page to find out more about the service

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel