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Ukraine’s fat-and-oil industry: a positive among negatives 7 April, 2020 at 13:04

●  What will happen first: growth in crude oil and vegetable oil prices or a decrease in supply price of Ukrainian vegoil? 

●  An unusual rise in vegoil exports is expected towards the end of MY 2019/20

UkrAgroConsult keeps analyzing the fat-and-oil industry’s position. Here we will focus on positive factors that may result in an optimistic scenario. A negative scenario for the sunflower oil  market was analyzed in the “Black Sea Vegoils” Issue No.13 of March 30, 2020.

Positive signals and bullish crude oil price expectations, as well as dwindling supply of palm oil may push up prices of other vegetable oils. The premium of Ukrainian SO against other oils will decrease, implying a gain in competitiveness.

Major crushers continue production even under the conditions of high vegoil inventories. They have contracts for delivery within the coming months (April-May) and are ready to conclude forward contracts.

Previously signed contracts give traders some “safety buffer” even when foreign demand is sliding.

Sunflower oil exports in the first seven months of MY 2019/20 (September-March) remained record-high at 3.7 MMT. SO consignments ready for shipment on April 1-15 also remain high. The hryvnia’s devaluation gives exporters additional advantages.

UkrAgroConsult expects an unusual rise in sunflower oil exports towards the end of the 2019/20 season.

Taking into account the experience of demand recovery after the 2008 crisis, we expect the 2020 recession to adversely affect the agricultural sector to a lesser degree than other sectors of economy, at least until December 2020. 

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