Sunflower oil production is one of the key sectors of the agricultural complex in Ukraine. Over the past 15 years it has transformed into a powerful industry, the profitability of which is constantly increasing. Read more about how sunflower oil production in Ukraine is developing today in our material. Information for 2008-2013 can be found in our research.
Sunflower oil market: product features
Raw sunflower oil can be cold-pressed (pressed) and extracted. Its source is the sunflower seed, which is cleaned, crushed and pressed. Further, the press oil is stored and sedimented, and the remaining mass (pulp) is given to the oil extraction shop. In a special apparatus the oil is extracted with the help of solvents. After both shops, the product is purified or refined.
Sunflower oil ingredients include:
- vegetable fats, which are easier for the body to digest than animal fats;
- fatty acids responsible for building cells, tissues, blood and nervous system;
- Vitamins A and D, essential for vision, immune system, bones and skin;
- Vitamin E (tocopherol), an antioxidant that is 12 times more abundant in sunflower oil than in olive oil.
Some people believe that sunflower oil has absolutely no cholesterol. In fact, cholesterol is part of the membranes of plant cells of the raw material, so it is present in the finished product. However, its content is so low (14 mg/kg) that it does not cross the boundary of the permissible error.
Domestic sunflower oil market in 2016
Sunflower and related oil dominate in the structure of oil and fat production. Experts, including Stepan Kapshuk, CEO of Ukroliaprom, claim that the leading status of oil will remain in the near future.
This season Ukraine holds the leadership not only in sunflower seed production, but also in exports and oil production. Minister of Agrarian Policy and Food of Ukraine Taras Kutovoy said that taking into account the results of the harvesting campaign, Ukraine may produce 5.5 mln tons of sunflower oil and export about 5.0 million tons.
He adds that this year’s sunflower seed crop was an all-time record 12.9 million tons. This is 1.7 million tons more than last year. The forecast for the next season says that Ukraine will take 31% of the world share in sunflower seed production, 34% in sunflower oil production, and 57% in its exports.
Rating of manufacturing companies for 2015
- «Кернел». Крупная агрокомпания занимается экспортом подсолнечного масла, выпуском бутилированного масла под марками «Щедрый Дар», «Стожар» и «Чумак Золота», экспортом зерновых. Холдинг поставляет свою продукцию в более чем 60 стран (Индия, Турция, Египет, страны ЕС). Доля «Кернел» в экспорте зерновых из Украины приближена к 10% (по данным компании). На долю корпорации приходится примерно 8% мирового производства подсолнечного масла.
\The company’s owner Andriy Verevskyy shares his plans for the future and states that the company intends to double the volume of grain exports. Kernel is currently working on a project to expand the capacity of grain transshipment terminals in Ukraine. - «Агрокосм». Основанное в 1996 году, предприятие занимается дистрибуцией продукции Харьковского, Запорожского и Львовского масложировых комбинатов – подсолнечное масло (марки «Щедро», «ОЛЛІ», «Запорізький», «ХЖК»), майонез, горчица, кетчуп и другие продукты.
\Agrokosm is exporting to markets in neighboring countries. The enterprise is in the second place in terms of sunflower oil production. - Myronivsky Hliboproduct is an agro-industrial complex, which in addition to poultry farming is engaged in sunflower cultivation and oil production.
- Vioil is an industrial group founded in 1992, which is engaged in processing of oilseeds. Vioil produces bulk and packaged oil under the brand name “Violiya”. Having modernized in 2006, the group has expanded its presence in the domestic market. As for exports, Vioil supplies sunflower oil and other products to European and Asian countries.
- Cargill is one of the world’s largest grain traders. The company’s representative office in Ukraine was established in 1993. The company is engaged in the export of oilseeds, grain and grain products.
- Bunge is an agro-industrial company operating since 2002. In Ukraine, it is represented as Suntrade, which is engaged in processing of oilseeds. Bunge owns almost a full stake in Dnepropetrovsk MEZ, where bottled oil under the brands “Oleina”, “Ideal” and others is produced.
\tIn 2014-2015 marketing year, the plant produced more than 120 thousand tons of unrefined oil, and 45% of this volume was exported. - Pologovsky MPEZ was founded in 1974 and today specializes in the production of vegetable oil and meal (solid crushed cake left after oil extraction from seeds). Pologovsky MPEZ produces bulk and bottled oil (“Slavia”, “Smachna Kraplya”).
- Delta Vilmar CIS produces oil and fat products. The company began operations in 2006, and its oilseed processing plant in Odessa region was launched in 2013. Having mastered the domestic market, Delta Vilmar CIS started exporting products to Asia and some European countries.
- Glencore International AG is an international company that trades in agricultural products, natural materials and resources. The company has been operating in Ukraine since 1996 as Glencore Grain Ukraine, which specializes in the production and export of oilseeds.
- Noble Group Limited is an international corporation, which has been represented in Ukraine since 2008 by Satellite and Noble Resources Ukraine. These companies are engaged in harvesting and storage of grain and sunflower seeds, as well as their export to Europe.
Sunflower oil market: production structure 2016-2017 MY
For 2016-2017 oilseed processing of oilseeds exceeded 18 million tons per year .
In September-October, sunflower oil production rose to 916,000 tons (2.1 million tons of sunflower), which is 24.5% more than the figures for the same period last year (736,000 tons).
A record amount of sunflower oil was produced in October this year – excluding oil mills, the figure reached 516 thousand tons. The enterprises shown in the chart below produced 54.4% of the total volume in October.
Sunflower oil price market
Sunflower prices have declined for the third year in a row, but the domestic market price is stably high at $400/tonne. Processors’ margins can only improve by moving into premium price segments.
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There is competition from processors on the raw material market. It causes an increase in sunflower prices. Since mid-December, prices have risen by 100 UAH/tonne. Another factor affecting the price growth is the continuation of currency instability in the market.
Stocks
UkrAgroConsult agency reports that the stock of unrefined sunflower oil amounted to 67.4 thousand tons at the end of October, and this is 4 times more than at the beginning of the new season. According to the agency’s experts, stocks are decreasing, production is increasing, which means that oil exports from Ukraine are increasing.
The situation in the refined sunflower oil segment is opposite. Such products are sold on the domestic market, are in low demand due to high prices and are accompanied by low sales rates.
Undercapacity
At the end of November, sunflower processing capacity was only 70% utilized. Demand exceeds supply, so processors buy seeds at the highest cost. As a result, underutilization of capacity leads to high competition for sunflower seeds, the cost of which has not decreased for 3 years in a row.
Oil market overview: global situation
Oil producers, which are members of the European association FEDIOL, processed 29.91 million tons of oilseeds in January-October. In the same period of 2015, 30.72 million tons were processed, representing a 2.7% decrease in volumes.
For October, throughput was up 7.1% (3.15 million tons) compared to 2.94 million tons for September and up 1.5% compared to 3.11 million tons for October 2015, meaning there was a noticeable performance gain towards the end of the year.
The U.S. Department of Agriculture says in a December report that global sunflower stocks will be 2.066 million tons in 2016-2017, down 42,000 tons from 2015-2016. World sunflower stocks have been quite low for the second season in a row, but the figures have now reached their lowest point in 15 years.
In November 2016, the value of vegetable oil abroad reached the highest point since August 2014 at 175.6 points. This is 4.5% higher than the October figures.
Thus, sunflower oil stocks abroad are gradually declining and the cost is rising.
Sunflower oil market analysis: exports
Ukraine has long held the world leadership in sunflower oil exports. Ukrainian sunflower oil is sold in 105 countries of the world. The main consumer of Ukrainian oil is India, where we exported 30% of the total volume of production. Last season India also topped the list of importing countries of Ukrainian sunflower oil with an indicator of 34.6% for the whole year.
This year, agricultural products took up 40% of exports, with only the oil and fats group seeing growth in shipments from January through September.
From January to November, Ukraine exported 4.3 million tons of sunflower oil worth $3.3 billion (for comparison – for the whole of 2015, sunflower oil exports totaled 3.9 million tons or $3 billion).
In September-November, sunflower oil production and exports increased and amounted to 130% and 131.7% relative to the same period in MY 2015-16. At the same time, in November, oil production amounted to 141.4% and exports 142.3%, i.e. the indicators are increasing every month.
The December USDA (U.S. Department of Agriculture) forecast reports that Ukraine will export 5 million tons of sunflower oil for 2016-2017. That is, sunflower oil exports from Ukraine in 2016 will be 0.5 million tons more than last year’s figure.
Rating of vegetable oil exporting companies
(for the first half of 2016)
- “Kernel” – 21.2%;
- “Cargill, 8.4%;
- “Mironovskiy plant for production of cereals and mixed fodders” – 6.5%;
- Bunge – 5.1%;
- Wilmar International Limited – 2.9%;
- “Automation. Systems. Complexes” – 2.9%;
- Allseeds – 2.3%;
- Glencore – 2%;
- “Agrointer – 2.2%
- “Bessarabia-Agro” – 1.9%.
Cooperation with other countries
The priorities of Ukrainian companies are the policy of increasing exports and searching for new sales channels.
For example, in September this year, Allseeds Group and Saipol, the largest European operator in the sunflower and rapeseed oil market, signed a long-term agreement. In addition to financial and trade transactions, it includes French investments in the continuation of Allseeds’ development project in the areas of processing and infrastructure in Ukraine.
According to UkrAgroConsult, purchases of Ukrainian sunflower increased in Turkey in October 2016. The volume of exports to Turkey amounted to 17.5 thousand tons, which means that this country now accounts for 28% of Ukraine’s oilseed exports.
In October Ukraine significantly increased sunflower exports, so the maximum volume of oilseeds for the last 5 seasons appeared on foreign markets.
Analyzing the butter market: consumer portrait
Each inhabitant of Ukraine consumes 10.6 kg of sunflower oil annually. Vegetable oil is used in 98% of families, and 90% of them choose sunflower oil. Ukrainians need this type of oil for salad dressing, frying, and making homemade mayonnaise.
Part of Ukrainians purchase unrefined oil, which has a pleasant smell and yellow-orange color. The majority, i.e. 60% take refined oil from stores, which has no taste and odor. Among these 60%, residents of big cities have an advantage.
Sunflower oil market in Ukraine: popular brands
“Oleina.”
Oleina TM belongs to Bunge, an American agro-industrial company, which also produces Ideal and Rozumnitsya oil in Ukraine. The company owns a 94% stake in Dniprovsky Oil Extraction Plant, which is the largest producer of refined sunflower oil in Ukraine.
The range of the brand includes “Oleina Traditsiina”, “Oleina Dukhmyana Pervogo Vidzhimu” and “Oleina olive oil Extra Virgin”. The cost of refined oil “Oleina” 0.9 liters varies from 28.90 to 34.19 UAH.
“The Generous Gift.”
The brand belongs to the Kernel Company and is bottled at the Poltava Oil Extraction Plant. There are two types of oil in the range of “Shchedryi Dar” – “Pershiy Vidzhim” and “Kholodna rafinatsiya”. The cost of “Shchedryi Dar” for a pack of sunflower oil 1.0 liter ranges from 27.59 to 39.31 UAH.
“Chumak.”
“Chumak” is one of the largest enterprises in Ukraine, which offers consumers ketchups, sauces, mayonnaise, juices, paste and other products, including sunflower oil. The Chumak Zolota brand is owned by Kernel. The cost of refined oil “Chumak” with a volume of 1.0 liter is from 30.75 to 37.59 UAH.
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Trends in sunflower oil packaging design
The design of sunflower oil packaging emphasizes its vegetable origin, therefore floral motifs prevail here. The most frequent element of the label is a sunflower flower. The color scheme also supports the floral theme and is in green, yellow, blue tones. Other tones are rarely used.
(packages of Ukrainian sunflower oil presented in retail sale)
Supporting the attachment to the native land and natural motifs, Kharkiv-based design studio Glad Head developed a label for Oleos export sunflower oil.
The designers of the studio wanted to show the naturalness of the oil, tell about the place of its origin, but also not to use standard symbols. A rooster, a rabbit, a fish, some plants and, of course, sunflowers settled on the motley watercolor illustration. According to the studio’s art director Anastasia Dovgal, the design of this label is both restrained and adheres to tradition, but stands out from the mass of sunflower-feminine images on the shelves.
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Sunflower oil market: forecasts
Objectives
Sunflower oil producers intend to expand the raw material base, increase the assortment and improve the technology of product processing. The main share of investments should be directed not in adding areas, but in increasing the intensity of production.
Increasing sales markets remains a priority for the next marketing year as well. India and China, the main importers of sunflower oil from Ukraine, are interested in continuing cooperation and increasing import volumes.
Retail prices
Svitlana Kupreeva, an oilseed market analyst at UkrAgroConsult, says that there are two opposing views on the development of retail prices for sunflower oil. One group of analysts believes that price increases are inevitable, with the cost of oil rising by 15%. Others agree with the Ministry of Economic Development and Trade of Ukraine – the cost of social products increases by 20% faster than other food products, so cardinal changes should not be expected.
Export duty
Kapshuk believes that the oil and fat complex will be able to develop stably only if the export duty on sunflower seeds is maintained. Its abolition will be a reason to increase sunflower prices and the domestic cost of oil.
Strategy
Serhiy Feofilov, CEO of UkrAgroConsult, believes that the development strategy of the oil and fats sector needs to be modified. He says that it is necessary to adapt to increased competition in the global markets. Sergiy also diagnoses a threat to the raw material base and suggests changing the areas of oilseeds.
He adds that there is a branding problem in the form of attacks on sunflower oil brands. Consumers believe that the oil leads to the development of diseases, contains an abnormal amount of fats, is toxic and so on. You can read more about consumption trends in Ukraine here.
According to Sergiy, the new strategy should be based on the formation of a new image of oil – it is a premium purchase. And for this purpose it is necessary to create a successful brand of Ukrainian sunflower oil.
Unrefined oil
At the moment, crude unrefined oil takes up most of the oil produced. Ukraine produces about 600 thousand tons of refined sunflower oil, which is 10% of the total oil volume. The supply of the product for export has an approximate value of 230 million dollars, and the total capacity of the refined oil market is 3.9 billion dollars. In this market Ukraine is on the 4th place, and the first place is occupied by Turkey. Stepan Kapshuk believes that Ukrainian refiners should focus on this category. He also argues that the bulk of refined oil should be exported. The domestic Ukrainian market needs only 10% of the produced product, and at the same time the price for Ukrainians is constantly increasing.
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