Low sunflower prices in Ukraine prompt processing plants to reopen - grain exchange

MOSCOW. June 3 (Interfax) - Ukraine's seed oil crushing plants, which suspended production after February 24, began reopening in April-May due to a decline in sunflower prices and high processing margins.

"Enterprises are now actively buying sunflower against the backdrop of unpromising production forecasts for the next season. [...] Some plants provide processing services at a price of $80-$150 for one tonne, while others purchase sunflower at 15,000 hryvni-16,500 hryvni per tonne [$513-$564 per tonne at the current exchange rate], receiving a processing margin of up to $200 per tonne," the GrainTrade Ukrainian electronic grain exchange said on its website.

The reopening of seed oil crushing plants in Ukraine's western, central and southern regions was prompted by a sharp drop in sunflower prices due to problems with its exports from Ukraine as a result of the blockade of the country's seaports, it said.

Meanwhile, producers are in no hurry to sell sunflower at low prices, "as they expect production costs to increase in the new season, the exchange said. There are also difficulties with exporting seed oil processing byproducts such as oilseed residues and sunflower meal.

"Processing plants are now having difficulty delivering oilseed residues and sunflower meal to European customers because of more expensive logistics and the drop in prices in the EU amid the growth of Ukrainian produce supply,'" the grain exchange said.

The Ukrainian Grain Association said earlier that Ukraine's sunflower harvest will decrease 1.8-fold to 9 million tonnes in 2022 as compared to last year's 16.9 million tonnes, thus leading to a shortage of raw materials and the shutdown of some plants.