Ukrainian sunflower crush margins fall on low sunoil, sunmeal prices

23 Feb 2024 | Anna Platonova

Sunflower oil and meal producers are under pressure across the Black Sea region, after prices for processed products have tumbled over the past month, cutting margins for producers to the bare minimum in some regions, trade sources have told Agricensus Friday.

Prices for sunflower oil have fallen 7% over the period, while meal prices have plunged 24% under pressure from prevailing and relatively light demand from the main destinations, leaving processing margins in some regions squeezed as sunflower prices remain at high levels.

That could tee up a reduction in output, and has left traders expecting February to see a reduction in expected production levels, particularly in Ukraine as Russia targets excess flows into the Turkish market.


Sunflower oil prices from sellers have decreased by an average of $60-70/mt - or 7% - over the past month depending on the country of origin and were heard at $835-840/mt CIF Mersin for spot delivery, against buyers' ideas at $825-830/mt CIF Mersin.

Trade sources have told Agricensus that they believe that the market has almost reached its minimum, but would not rule out further adjustments in the short term and believe that March will be a key month.

Prices for sunflower meal fell by 24% in Ukrainian ports to $155-165/mt CPT port and were down by 17.5-18% to $225-235/mt CIF Marmara, according to buying levels for March delivery.


This comes as demand from major demand destinations such as India, China, and EU countries remains sluggish and product supply in the Black Sea region is more than sufficient, given the presence of two major sunflower oil exporters in the region.

In addition, India, which has significantly reduced purchases of Ukrainian sunflower oil due to the risks associated with the war, and has turned instead to sunflower oil of Russian and Argentine origin, is now inclined to prioritise purchases of Argentine sunflower oil.

That comes amid increased risks and additional costs associated with transiting volumes through the Red Sea.

Russian sellers of sunflower oil are trying to expand their presence in the Turkish market and have been reducing prices sharply to now reach levels that are on average $5/mt lower than Ukrainian volumes.

Traders had expressed hope that the return of Chinese buyers, after the Lunar New Year break, would fire some buying interest, but so far the trade seems to be testing the market and have not begun actively buying. 

Sources spoken to by Agricensus have said they see relatively low prices for sunflower oil of Black Sea origin - at $840/mt CIF China, for delivery in March-April, while for sunflower meal prices were heard at $280-295/mt CIF China on average, depending on quality.


Against the background of falling prices for finished products and restrained sales of farmers at high prices, the crush margins of some Ukrainian crushers have reached minimum levels.

Trade sources at crushers in the central and western parts of Ukraine talk about a decrease in margins to a minimum level with purchase prices for sunflower at the level of UAH14,000/mt ($363/mt) CPT crush plant, but in some cases margins drop to zero, once increased costs for logistics are factored in. 

Crushers do not rule out a reduction in crush or its suspension if current trends continue.

However, some crushers in the southern regions report sufficient processing margins of about $50/mt at current price levels for both raw materials and processed products, which is likely due to minimal logistics costs due to the territorial proximity to ports.

Nonetheless, given the decline in prices and sluggish demand in February for sunflower oil and sunflower meal, market participants expect a possible decrease in sunflower crush in February by 7-13% from the 1.5 million mt predicted at the beginning of the month to 1.3-1.4 million mt.