Revolution in Ukrainian oilseed sector: from exporter to importer?

25.09.2018

(based on materials of the VI International Conference “Black Sea Oil Trade-2018,” oilseed market expert Yulia Garkavenko, UkrAgroConsult). Ukraine’s oilseed market has been featuring the following trends over recent seasons: exports of rapeseed and soybeans still prevail over their domestic crushing.

demand of oilseeds

Available crushing capacities for sunseed far exceed its crop.

Sunseed price remains stable even when sunflower oil price slumps, therefore the crusher’s margin of profit increasingly narrows.

Nonetheless, the construction of crushing facilities continues. It is set to gain at least another 2 MMT next year.

On the one hand, all of the oilseeds have their unique features, but the common thing is a shortage of raw materials for processing.

Therefore, the following two future scenarios can be considered.

Following the global trend and expanding the planted area of oil crops.

However, Ukraine already rapidly increases oilseed plantings. Their acreage in the country has expanded threefold since 2001. 

Nevertheless, Ukraine cannot increase its oilseed-planted area infinitely, because this would affect primarily grain crops. Moreover, this may even limit exports in case of unfavorable weather conditions. In 2018, sunseed replaced wheat as the main crop in the Ukrainian market.

Ukraine may start importing oilseeds.

First of all, this concerns soybeans. Other countries can be viewed as an example. For instance, Turkey.

This country does not grow soybeans at all but imports 2.5 MMT of them to produce compound feeds for domestic use.

Think, for instance, of Argentina. With own production at 55-60 MMT a season, the country has been importing 1 to 4 MMT of soybeans since four years ago in order to utilize its capacities, which currently total 67 MMT, and earn on processed products.

However, Ukraine has sufficient potential for increasing own oilseed production by raising yields. This would reduce the shortage of oilseeds for crushing and considerably expand the share of high value-added products in Ukraine’s total exports.

 

UkrAgroConsult

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