Prices are rising, processing margins are falling
Зміст
What’s happening on the market
The rise in oil seed prices has become a significant challenge for the agricultural sector, but at the same time, the decline in processing margins threatens the stability of this industry. The current situation shows that due to the high cost of raw materials, the profitability of processing is decreasing, and the financial burden on producers and processors is increasing. On the other hand, the oil seed market remains an important export direction for Ukraine, which reinforces the need for effective adaptation to new conditions.
Respond in time
Experts predict that in order to maintain the market, it is necessary to focus on optimizing costs, increasing the efficiency of processing enterprises and finding new opportunities for exports. The oil seed market will be forced to adapt to the instability of world prices and increasing competition. Despite the challenges, the stability of the industry will depend on the ability to respond to changes in a timely manner and use the potential for innovation.
The oil seed market is experiencing an unstable situation: despite increasing demand, production is decreasing, which causes competition to intensify. Due to the drop in margins, some processors are considering reducing production volumes or even shutting down some plants. The main reason for this situation is economic pressure and difficulties with exports, which have led to an increase in raw material prices.
How to adapt
The world is also witnessing an increase in sunflower oil prices, which further complicates the situation for Ukrainian producers. However, some experts believe that even in conditions of low margins, the market will be able to adapt and continue its activities, using alternative sources of financing and optimizing production processes to maintain competitiveness.
Economic pressure
The increase in prices on the oil seed market is taking place against the backdrop of reduced supply and increased demand both within the country and abroad. Producers are experiencing significant economic pressure due to low margins, which is forcing some enterprises to reduce production volumes. For many of them, this is the only solution to reduce costs and continue operating in the market.
Key factors influencing the situation
Key factors influencing the current situation include high raw material prices, reduced access to international markets and export restrictions. Although sunflower oil prices remain high, logistics problems and low margins make this business difficult. To adapt to market changes, manufacturers are trying to optimize processes, looking for additional sources of financing to remain competitive even under economic pressure.
Experts’ forecast
Given these challenges, experts predict that some enterprises will be forced to reconsider their business models. Despite the difficulties, analysts believe that the market can find balance due to innovations, modernization of equipment and increased efficiency of production processes, which will allow it to stay afloat.
According to the Ukroliyaprom association, 32 oil refineries in Ukraine have a total processing capacity of 18 million tons. Last year, the utilization rate of these enterprises was 75-80%, but this year it decreased by 30%. This was stated by Stephan Kapshuk, director of Ukroliyaprom, during the International Conference “Fat-and-Oil Industry 2024”.
Personal opinion
“This season, less area was sown for sunflower, while soybean crops reached almost 3 million tons. Although the yield is high, farmers are in no hurry to sell grain for processing. Currently, sunflower processing is economically unprofitable, as its price has risen to a historically high level,” Kapshuk noted.
He also added that rapeseed is actually not subject to processing, since about 2 million tons were exported, 400 thousand tons were processed, and only about 600 thousand tons remained in stock.