Despite the negative expectations, Ukraine retained its leadership in the global sunflower oil market in 2023-2024 marketing year (MY), accounting for 42% of the global production, while Russia accounted for 29%, UkrAgroConsult, a Ukrainian information and analytical agency, reports.
The analysts referred to the forecast of the U.S. Department of Agriculture, according to which in 2023-2024 MY the forecast for Ukraine’s gross sunflower production due to higher yields was increased by 27% to 15.5 mln tonnes compared to 2022-2023 MY, and for Russia – by 5% to 17.1 mln tonnes.
The high exports of sunflower oil were achieved due to the increase in harvest. Stable operation of the sea corridor is becoming an important point for Ukraine in realization of the export potential: the country increased exports by 9% compared to 2022-2023 MY, Russia – by 10%, experts noted.
They noted that since the beginning of the war, the markets for sunflower oil have been redistributed. For Ukraine, the European Union has become the key sales destination. In addition, Turkey has reoriented its purchases from Russia to Ukraine, while India and China continued to increase Russian imports.
According to analysts’ forecast, 2024-2025 MY will be a bad harvest year for sunflower. According to the current USDA forecast for September 2024, the global sunflower production is estimated to be the lowest in the last four seasons due to unfavorable weather conditions in the key producing countries – 50.6 mln tonnes, which is 10% less than the previous season. At the same time, Ukraine is expected to reduce the production of this crop by 19% to 12.5 mln tonnes compared to 2023-2024 MY, and Russia – by 6% to 16.0 mln tonnes.
“Ukraine will retain the leadership, but the share in the global production will decrease to 41% vs. 42% in 2023/24 MY in favor of Russia – 33% vs. 29%. The forecast for Russia seems quite optimistic,” UkrAgroConsult stated.
Exports of agricultural products in December 2023 should exceed 6 million tons, which became possible due to the opening of the Ukrainian shipping route, said Maksym Kharchenko, analyst at UkrAgroConsult, an information and analytical agency.
“Exports of agricultural products in December 1-15 totaled 3.38 million tons, which is 20% more than in the same period of the previous month. At the same time, the share of land exports in total exports decreased to 14.1% amid increased activity of seaports. At the same time, the role of the Danube ports in the first half of December was the lowest for the whole of 2023,” he said.
According to him, the rate of exports of agricultural products by road decreased by the end of the year due to the continuation of strikes in neighboring European countries. Currently, a queue of almost 4,000 trucks has formed to enter Ukraine from Poland. The Ministry of Infrastructure of Ukraine says that by the end of this year, Ukraine and Poland may come to a common position on blocking the borders.
“It should be noted that vegetable oils remain the main commodity transported by road for export,” UkrAgroConsult said.
Speaking about the export of agricultural products by rail, analysts noted that its pace in the first weeks of December is only slightly behind the pace of previous months. The total export volume in December is forecast at 800-900 thousand tons, which does not differ from the average for the last four months. Export flows by rail have not yet had time to reorient towards seaports.
UkrAgroConsult reported that as of December 19, 6.6 thousand railcars with grain (or about 400 thousand tons) were heading to Ukrainian seaports via domestic rail transportation, which is almost a thousand more than a week earlier.
At the same time, exports by sea through the ports of the Danube region in the first half of December amounted to only 0.56 million tons, which is far behind the same period last month.
“The Danube region is gradually losing its attractiveness for exporters due to the opening of a much cheaper option for exporting through Odesa ports,” analysts explained.
Partly due to the activity of the ports in the Danube region, in January-November, the Romanian port of Constanta shipped 32.6 million tons of grain, setting a record (the previous annual record was just over 25 million tons). Ukrainian grain amounted to 13 mln tons, or about 40% of the total transshipment volume. In 2022, the volume of transshipped agricultural products from Ukraine in the port of Constanza amounted to 8.6 million tons, UkrAgroConsult stated.
Export of agricultural products from Ukraine in the context of the Russian military invasion could reach 5 million tons per month due to increased shipments through the unblocked Black Sea ports, but an estimate of 3.5-4.5 million tons per month looks more realistic.
As reported on the website of the consulting agency Ukragroconsult on Monday, the current 2022/23 marketing year (MY, July-June) will be non-standard due to the absence of traditional seasonal export peaks that occur as the harvest progresses.
“If you look at monthly exports from the beginning of 2018/19 MY, then seasonality is clearly visible. Conventionally, Ukrainian grain exports can be divided into three stages (waves): the wheat-barley wave (begins in July-August), the first corn wave (begins in September-August). October) and the second corn wave (begins in February-March, when the supply of corn from South America disappears from the world market),” the agency said in a statement.
According to him, there will be no significant export peaks this season due to significant leftovers from last season’s harvest ready for export, but a gradual increase in shipments will be noticeable as the work of seaports normalizes.
“Current shipments from Odessa ports are still undergoing a test period, market participants are still evaluating further prospects, so it is too early to say with confidence that Ukraine will be able to fully realize its grain export potential, but exports in August may already show a significant increase,” explains ” Ukragroconsult”.
As reported, since the beginning of 2022/2023 MY, Ukraine has exported 2.98 million tons of grain crops, including 1.94 million tons of corn (65% of the total supply), 783 thousand tons of wheat (26%) and 257 thousand tons of barley (8.8%).
In addition, in July 2022, Ukraine exported 2.66 million tons of grain and oilseeds and agricultural products for export by all modes of transport, which is 22.7% more than in June.
The analytical agency UkrAgroConsult predicts a wheat harvest of 25.9 million tonnes for 2020 with exports of 17.5 million tonnes and a corn harvest of 36 million tonnes with exports of 29 million tonnes.
“The assessment of export potential for wheat is quite consolidated – 17.5 million tonnes, this figure is fixed in a memorandum, an appendix to which has been recently signed. In any case, exports will be about 3 million tonnes lower than last year,” the UkrAgroConsult export for the grain market, Yelyzaveta Malyshko, said during the Black Sea Grain & Oil Trade 2020 international conference in Kyiv.
According to her, the start of the wheat export season was impressive, for example, from July 1 to August 28, some 4.16 million tonnes of wheat were exported, which is the highest figure for this period in the previous years.
“Now active export contributes to the fact that domestic prices for wheat in September are about $ 30 higher than last year and the demand remains. Expectations in this regard are quite optimistic. Forwards for December are now showing $ 225, but we cannot exclude autumn price deflection after the arrival of Canadian and then Australian wheat crop,” the expert said.
UkrAgroConsult’s estimate of the corn harvest for this year is 36 million tonnes.
The expert noted price expectations for corn are optimistic, however, a decrease in prices during the period of active harvesting cannot be ruled out.
