Ukrainian Sunflower Prices Slowing Down on Resumption of Harvest Among Other Factors

The Ukrainian oilseed market has experienced some positive sentiments recently aiding market prices to stay calm. As of last week, the harvesting of sunflowers was at an advanced stage. Reports coming out from Ukraine suggest so far, close to 5 million mt of sunflower has been shelled. Although recent unexpected heavy rains slowed the progress of sunflower harvesting, farmers have quickened their pace since the rains stopped and a forecast of drier conditions at least until the end of October will help dry the sunflower crop for harvesting.

The expected total harvest is however 10.5 million mt, down 7 million mt compared to 17.5 million mt the previous year, according to data from the US Department of Agriculture (USDA). This year's crop was revised down 40% owing to slow delayed and reduced planting in the second quarter of the year and loss of planting acreage in certain areas as the lands were occupied by fighters.

Tridge analyst, Prince Yawson in June reported that sunflower plantings for the 2022 harvest to fall to 4.4 million ha. Down 35% and the lowest in more than a decade. The reason for this he added is the continuous military activity in the main sunflower-growing areas in the country. The 2022 crop was thus forecasted at 9.5 million which would be expected to deepen further the already bullish market dynamics. Be it as it may, there seems to be a recovery in the numbers which may explain why prices of Ukrainian sunflowers have edged down recently.

With the current numbers out, the Ukrainian government has already put out plans for the sale, export, and distribution of the sunflower crop. The clarity from the government to the market is one of the reasons purchase prices for delivery to plants have kept bearish. According to the government, more seeds will be sent processing into oil to be exported with only a little of about a million mt going out to exports. This goes to help both big and medium and small crushers who would have enough seeds to crush so far as crush margins remain favourable.

Another factor keeping prices down is the excess stock available in warehouses and storage facilities. Because of the conflict, most farmers have not been able to sell of all their 2021 harvest yet. That said, although there has been some movement of seeds via alternative routes, quantities are below pre-conflict levels.

Looking ahead, an escalation of the conflict may be the outside factor that could affect further put downward pressure on prices. Any escalation of events slackens exports as port terminals activity slows if not grounding to a halt. This then causes traders and buyers to reserve purchases causing a glut in the domestic market and pushing prices down.