For a number of years, Ukraine, the EU and Russia are the key global producers of sunflower meal. Ukraine keeps the leadership position among the major exporters of sunflower meal, and covers nearly 65% of the global demand for the product.
To date, the EU countries, Turkey and Belarus are the main importers of sunflower meal on the global market. Taking into account the growing interest of China in sunflower meal, it may happen that the TOP of the global buyers of the product will change in the nearest future.
The export geography of Ukrainian sunflower meal is rather large, and covers nearly 50 countries. It is worth noting that in previous seasons for almost three years the country failed to begin the shipments to China, due to the complicated procedures for permission of the supplies of agricultural products, which required the preliminary approval of various phytosanitary issues and the following signing of numerous interdepartmental agreements.
On September 15, 2017, the Ministry of Agrarian Policy and Food of Ukraine and the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China (AQSIQ) signed the protocols on sanitary and phytosanitary requirements for the exports of sunflower meal from Ukraine to China. In November 2017, seven Ukrainian companies-producers of sunflower meal received authorization to export their products to China: Creative Group, Odessa oil-extraction plant LLC, Delta Wilmar CIS LLC, Melitopol Oil Extraction Plant PJSC, Ellada oil extraction plant, Protein-Production, and Ukrainian Southern Agrarian Group LLC.
According to the official statistics figures of Ukraine, in December 2017 from SE Odessa Commercial Sea Port the company Delta Wilmar CIS exported the first container batch of sunflower meal to China, with the volume of 0.5 thsd tonnes. In the reporting period, the general exports of Ukrainian sunflower meal to the country totaled 4.3 thsd tonnes, and the shipment rates continued actively growing. It should be noted that for 11 months of the season-2017/18, the supplies reached 155 thsd tonnes.
In September-June of the reporting season, the general share of the TOP-3 of companies-exporters of Ukrainian sunflower meal to China reached nearly 83% of the general shipment volumes.
As for the price situation on the export market of sunflower meal, it should be noted that after Ukraine received the reporting new buyer in December 2017 — China, the market segment significantly increased the competition rates, as well as the price ranges in the ports. In the first half of May 2018, Chinese importers increased the prices for Ukrainian sunflower meal (335-345 USD/t CIF), due to the high demand rates in terms of the insufficient level of the product supply.
On July 2, 2018, the press-service of the State Service of Ukraine for Food Safety and Consumer Protection (SSUFSCP) reported that the General Administration of Customs of the People's Republic of China (GACC) authorized another 17 Ukrainian companies-producers of sunflower meal to export their commodities to China, in addition to 7 companies, which were previously authorized.
The reporting decision culminated in the process of rather long and fruitful negotiations between business and professional associations, as well as acknowledgment of the existing system of state control in the production of plant origin forages in Ukraine.
Also, ADM Illichivsk, CJSC Kakhovka branch of AT Cargill, Allseeds Black Sea, Pology Oil Extraction Plant PJSC, UkrOliya LLC (at the production capacities of JSC UkrOliyaProduct ALC) received the same qualification.
Therefore, to date 24 Ukrainian enterprises already has the right to export sunflower meal to China. According to reports of various industrial associations, the companies which previously planned, but run out of time to submit the documents for receiving of the certificates for sunflower meal exports to China, will be able to do it within 6 months, and therefore the list of companies-exporters can even increase.
It may happen that in 2018/19 MY the import volumes of sunflower meal in China will grow, due to the high demand rates, at the same time the pricing situation will become the key influencing factor. Also, China can change the geography of the countries-suppliers of sunflower meal, due to the current plans of Russian and Kazakh companies to open the Chinese market for their products. However, only the further signing of the intergovernmental agreement on the phytosanitary and veterinary regulations between the above-mentioned countries will allow realizing the export flows.
Julia Ivanitskaya, oilseed market analyst at APK-Inform Agency
As a reminder, for 5 recent years China increased the consumption of sunflower meal by almost 60%. The forecast for 2018/19 MY totals 1.2 mln tonnes (USDA). The trend developed, due to popularization of sunflower oil usage, and increasing of its the domestic processing rates of sunflower seed. According to APK-Inform estimations, the growth rates of demand for sunflower meal will exceed the domestic production figures, and the country will have to import the product, to compensate the forecasted deficit.
For several recent years, China entered the TOP-10 of countries-importers of sunflower meal from Ukraine. At the same time, the supplies of the Ukrainian product to China exceeded the volumes and growth rates on such traditional markets as Spain, the United Kingdom, Thailand, Vietnam, Israel, Egypt, etc.
According to APK-Inform estimations, in 2017/18 MY the exports of sunflower meal from Ukraine to China varied within the range of 160-170 thsd tonnes. Taking into account the large-scale market capacity of China, which is constantly looking for alternative sources of protein oilseed products in terms of the current trade conflict with the USA, APK-Inform expects for the great prospects of increasing of the supplies of sunflower meal to the country.
At the current stage, it is rather difficult to forecast the export volumes in a new season, but various market experts announced the figures of 1 mln tonnes. So, what does 1 mln tonnes of sunflower meal mean for Ukraine? In 2017, the Ukrainian enterprises, which were authorized to export sunflower meal to China produced 3.4 mln tonnes of the oilseed by-product, and 1 mln tonnes formed nearly 30% of the volumes only. Also, in 2018/19 MY Ukraine will export 4.75 mln tonnes of sunflower meal, so the required volume totals nearly 20% of the forecast. Therefore, the forecast of 1 mln tonnes is quite sustainable, in terms of forming of the favourable trade atmosphere between the parties.
The new season will provide more opportunities for the Ukrainian market of sunflower meal in the terms of volumes and price formation. According to Shanghai JC Intelligence Co. Ltd, in 2018/19 MY the Chinese demand for sunflower meal will rise to 3.5 mln tonnes, against 150 thsd tonnes in 2017/18 MY, as the USDA forecasted. In addition to the Chinese factor, the price boom on the global grain markets can also strengthen the interest of companies-producers of animal feed in alternative sources of protein, and support the prices of Ukrainian sunflower meal, even despite such price-founding fundamental factor as the expected record production of sunflower seed in Ukraine in 2018.
Viktoria Zelenaya, APK-Inform Agency
You can become acquainted with the trends and promising directions in the production of oilseeds and fat-and-oil products in the Black Sea countries within frames of the seventeenth international conference "Fat-and-Oil Industry - 2018", to be held on November 6 in Kyiv (Ukraine).