Kernel Agro Holding, one of the largest in Ukraine, processed 744 thousand tons of sunflower seeds in the third quarter of FY2023 (January-March), an increase of 32% compared to the same period last FY, operating six oilseeds processing plants.
“Vegetable oil sales in Q3 FY2023 increased only 1% from the same period last year to 273,000 tons, including 20,000 tons of bottled sunflower oil,” the company said on the Warsaw Stock Exchange.
According to it, two oil extraction plants belonging to the group remain inaccessible in the high-risk zone of Kharkiv region with regular shelling by Russian occupiers.
“The group managed to increase the utilization of its plants in January-March 2023 compared to the previous quarter, given the stabilization of electricity supplies in Ukraine and the expansion of the grain corridor,” Kernel pointed out.
Overall, in the first nine months of FY 2023 sunflower processing volume decreased by 8% – to 1 million 858.08 million tons, and oil sales – by 10%, to 819.96 thousand tons.
According to Kernel, due to the postponed 2022 harvest campaign, which was postponed until the winter of 2022/2023, elevator loading in the third quarter of FY 2023 reached an unusually high level of 687,000 tons. However, volumes for the first nine months of the season were down 34% from the same period last year to 2.7 million tons, reflecting a lower 2022 crop compared to the 2021 season.
It is pointed out that the volume of transshipment of export terminals in Ukraine in Q3 FY2023 almost halved compared to the same period last year to 1.1 million tons of grain, sunflower oil and meal, compared to 1.7 million tons of transshipment in the previous quarter.
“The Group’s export volumes are highly dependent on the operation of the “grain corridor” in the Black Sea. Although the grain corridor deal was extended in March 2023, it remains unclear for how long. “Moreover, in the last few days, ship inspections were completely stopped as the Russians refused to perform their duties to interrupt the initiative,” Kernel noted.
The company added that, in addition, stiff competition between Ukrainian terminals for quotas for agricultural exports through the “grain corridor” and the existing quota distribution mechanism are unfavorable for market leaders like Kernel, as historically smaller operators handling relatively smaller volumes have received disproportionately high quotas, making it impossible to maximize exported products.
“Recent import and transit restrictions imposed by neighboring EU countries further reduce agricultural exports from Ukraine,” the company pointed out, specifying that since the launch of the “grain initiative,” 87% of its export volumes have been shipped to foreign markets through Black Sea ports, 6% through Danube ports and 7% through domestic routes.
Continued difficulties with grain logistics in the Black Sea region led to a 61% year-over-year decline in grain exports from Ukraine in Q3 FY2023 to 0.8 million tons, Kernel added.
“To maximize operational efficiency, the Group gives preference to sunflower oil and meal ships rather than bulk grain ships (given the more attractive margins in the Group’s oilseed processing business), although this approach reduces grain export volumes, as logistics capabilities remain a key bottleneck,” the statement said.
According to him, the volume of transshipment of export terminals in Ukraine decreased by 52% to 3 million 504.59 thousand tons and grain exports – by 61% to 3 million 77.7 thousand tons in 9 months of FY2023.
“Kernel” also reported that at the time of the report and since the beginning of a full-scale invasion of Ukraine by the aggressor, 1405 employees of the Group were mobilized in the Armed Forces of Ukraine or joined the territorial defense units. Of these, 558 were demobilized and returned to work, 22 employees were killed, and more than 70 employees were wounded.
“Before the war Kernel was the world’s number one producer and exporter of sunflower oil (about 7% of world production) and the largest producer and marketer of bottled sunflower oil in Ukraine. The company was also engaged in cultivation of other agricultural products and their sale.
In FY2022 (July-2021 – June-2022), the holding posted a net loss of $41 mln versus $506 mln net profit in the previous FY, while its revenue decreased by 5% to $5.332 bln and EBITDA decreased by 3.7 times to $220 mln.
Oil prices of benchmark grades fell on Thursday to their lowest level since early April and continue their weak decline on Friday morning.
This could be the first week of losing territory in the last five weeks. Among the negative factors is a strengthening U.S. dollar, notes MarketWatch. In addition, traders fear that further tightening of monetary policy by the Federal Reserve and other major central banks could worsen the global economy and reduce the demand for fuel.
The quotations of June futures for Brent at London Stock Exchange ICE Futures made $81.07 per barrel by 8:02 a.m. which is $0.03 (0.04%) lower than the closing price of the previous session. The previous day those contracts fell by $2.02 (2.4%) to $81.1 per barrel.
The price of WTI futures for June oil at NYMEX fell by $0.03, to $77.34 per barrel. At the end of previous session the contracts value decreased by $1.87 (by 2.4%) to $77.37 per barrel.
According to Trading Economics, the decrease in WTI quotations since the beginning of the current week exceeds 6%.
Oil prices are stable Wednesday ahead of the release of last week’s U.S. energy inventory data and the country’s March inflation report.
June Brent crude futures on London’s ICE Futures exchange stood at $85.65 a barrel by 8:05 a.m. Wednesday, up $0.04 (0.05%) from the previous session’s close. Those contracts rose $1.43 (1.7%) to $85.61 a barrel on Tuesday.
The price of WTI futures for May oil grew by $0.07 (0.09%) to $81.6 per barrel at electronic trades of the New York Mercantile Exchange (NYMEX) by that time. Contracts rose $1.79 (2.2%) to $81.53 a barrel in the previous session.
“The recent OPEC+ decision to cut production continues to support the oil market,” said Warren Patterson, who is responsible for oil market strategy at ING Groep NV.
“However, at the moment all traders’ attention is focused on data on consumer price dynamics in the U.S., and higher-than-expected inflation will have a negative impact on risky assets,” Patterson was quoted by Bloomberg.
These data will be published by the Labor Department of the USA on Wednesday at 15:00 Moscow time. Experts questioned by Trading Economics on average predict a slowdown of inflation in the country in March to 5.2% on an annualized basis from 6% in February.
The market’s attention is also directed to the U.S. Energy Department’s report on the country’s energy inventories for the week ended April 7, which will be released at 5:30 p.m.
According to the American Petroleum Institute (API), released on Tuesday night, U.S. oil inventories rose by 377,000 barrels last week after falling by 4.3 million barrels a week earlier. Experts polled by Trading Economics, on average, had expected a 1.3 mln barrel increase in inventories.
Stocks at Cushing terminal, which stores oil traded on Nymex, decreased by 1.4 million barrels, API data show. If this estimate is confirmed by official data, the reduction in inventories in Cushing will be noted at the end of the sixth week in a row.
Oil prices are rising Tuesday morning, recovering from a sharp decline the day before.
The value of June futures for Brent on London’s ICE Futures Exchange stood at $84.73 a barrel by 8:05 a.m., $0.55 (0.65%) above the previous session’s closing price. Those contracts fell 94 cents to $84.18 per barrel at the close of trading on Tuesday.
The price of WTI futures for May at electronic trades of the New York Mercantile Exchange (NYMEX) is $80.33 per barrel by that time, which is $0.59 (0.74%) above the final value of the previous session. The day before, the contract fell by 96 cents to $79.74 per barrel.
The publication of reports by the U.S. Energy Information Administration, the International Energy Agency and OPEC will be key events for the oil market this week.
Investors are also waiting for data on U.S. inflation in March. Analysts polled by Trading Economics forecast that the pace of consumer price growth in the U.S. slowed to 5.2% in March from February’s 6%.
The spread between Brent futures for December of this year and December next rose to $5.5 a barrel from $2.5 a barrel three weeks earlier. This indicates that the market fears a reduction in inventories, notes Bloomberg.
Oil prices are down slightly on Monday after a jump last week following a decision by a number of OPEC+ countries, including Saudi Arabia, to further cut production.
U.S. and European stock exchanges were closed on Friday due to the Easter holiday.
The price of June futures for Brent crude oil on London’s ICE Futures exchange was $85 a barrel by 8:05 a.m. Monday, down $0.12 (0.14%) from the previous session’s close. Those contracts rose $0.13 (0.2%) to $85.12 a barrel on Thursday.
The price of WTI futures for May oil at NYMEX fell by $0.09 (0.11%) to $80.61 per barrel by that time. At the end of previous session the contracts value grew by $0.09 (0.1%) to $80.7 per barrel.
Brent gained 6.6% and WTI gained almost 6.7%.
The market’s attention this week is fixed on monthly reviews of OPEC and International Energy Agency (IEA) on oil market and also on US Department of Energy data on energy reserves in the country.
Last week, the U.S. Department of Energy reported a decline in both oil and gasoline and distillate inventories in the states.
“Economic statistical data will be key for the oil market this week,” notes Saxo Capital Markets Pte analyst Charu Chanana.
The recent decision to cut production by a number of OPEC+ countries “was partly designed to squeeze short sellers out of the oil market, and oil prices may now be better able to reflect market fundamentals,” Bloomberg quotes the expert as saying.
Oil prices show a strong rebound Monday morning after a number of OPEC+ alliance countries, including Russia and Saudi Arabia, announced additional production cuts.
June Brent futures on London’s ICE Futures exchange stood at $83.82 a barrel by 8:10 a.m. Q, up $3.93 (4.92%) from the previous session’s closing price. At the close of trading last Friday those contracts grew by $0.50 (0.6%) to $79.77 per barrel.
The price of WTI crude oil futures for May at the electronic trading on the New York Mercantile Exchange (NYMEX) is $79.51 per barrel by that time, which is $3.84 (5.07%) above the final value of the previous session. The contract rose by $1.3 (1.8%) to $75.67 a barrel on Friday.
Brent dropped 4.9% in March and 7% in the first quarter, writes MarketWatch. Futures on WTI have lost 1.8% and 5.7%, respectively, and the monthly decline was the fifth consecutive for the North American brand.
On Sunday evening, 8 of the 20 OPEC+ countries announced a voluntary reduction in oil production from May until the end of the year. The announcement was made ahead of Monday’s meeting of the OPEC+ monitoring committee (JMMC).
Interfax estimated the total reduction in oil production to be about 1.657 million bpd, of which 500,000 bpd would come from the deal’s leaders, Russia and Saudi Arabia. Non-OPEC countries, such as Kazakhstan, are going to reduce production by 78 thousand bpd, and Oman – by 40 thousand bpd. Among the OPEC members, the production is going to be reduced by 144,000 bpd in the UAE, 128,000 bpd in Kuwait, 211,000 bpd in Iraq, 48,000 bpd in Algeria and 8,000 bpd in Gabon.
“Producers are clearly unhappy with the recent drop (in oil prices – IF), which was more speculative than caused by fundamental factors. They are likely to be able to get quotes back above $80 a barrel, plus they are trying to respond preemptively to a smaller-than-expected increase in global oil demand in the coming months,” Saxo Bank analysts Ole Hansen said in an interview with MarketWatch.
“The Saudi oil minister likes to take the market by surprise, especially when it could hurt downside speculators,” he added.
