Sunflower shortage intensifies competition: oil refineries will be forced to raise purchase prices

Sunflower shortage intensifies competition: oil refineries will be forced to raise purchase prices

Competition Due to Raw Material Shortage

This year’s weather conditions in southern and eastern Ukraine, as well as in some central regions, are seriously complicating sunflower cultivation. Drought and excessive heat are limiting production potential, reducing yields, and sometimes even leading to a reduction in sown areas. As a result, refineries, especially those operating in regions with unfavorable conditions, may face raw material shortages.

Harvest Forecast: Almost Stable, but With Nuances

The “APK-Inform” agency forecasts that the gross sunflower harvest in 2025 will amount to about 12.9 million tons—only 1–2% higher than in 2024. However, such an increase is barely noticeable and does not offset all losses, as several key regions are experiencing significant production declines due to climate risks.

Regional Differences: Where the Shortage Will Be Most Felt

• South and East: These areas are expected to experience the greatest losses due to lack of moisture and extreme heat. Yields are falling significantly, and producers are forced either to reduce sunflower cultivation areas or switch crops.
• Central Regions: The situation depends on local climate; in some areas, losses are not so significant, but the overall trend is negative.
• North and West: These regions have better potential and can partially compensate for losses from drought-affected zones. However, dependence on weather remains high.

Impact on Refineries

Due to raw material shortages, refineries, especially in the south, east, and central regions, will be forced to:

1. Expand their procurement geography, seeking suppliers in regions with better sunflower-growing conditions.
2. Offer higher prices for sunflower seeds to attract farmers who might otherwise sell abroad or keep the raw material for themselves. This will lead to increased costs of production inputs.

Influence on Export and Domestic Market

The raw material deficit and rising procurement prices will inevitably affect both export and domestic markets. Domestic prices for sunflower seeds and oil may increase, while exporters might face tighter supply and higher costs.

Measures to Reduce Risks

To mitigate risks, companies can:

• Diversify suppliers and procurement regions.
• Optimize production processes to reduce raw material dependency.
• Collaborate with farmers to stabilize supply through contracts and incentives.

Comparison With Previous Years

While the overall harvest remains near previous years’ levels, climatic risks have created greater volatility and regional disparities. This contrasts with more stable periods when yields were uniform across regions.

Price Forecast for Sunflower and Oil

The shortage of raw material and increased competition for procurement will likely push prices upward. Analysts expect continued growth in sunflower seed prices and, consequently, higher oil prices both domestically and internationally.

Yield and Price Comparison for Sunflower in Ukraine (2022–2025)

Data shows slight increases in total production, but local losses due to extreme weather lead to regional imbalances. Prices are adjusted accordingly to ensure supply to processing plants.

Forecast for the Domestic Sunflower Oil Market in 2025

Domestic demand for sunflower oil remains strong. Despite higher raw material costs, refineries are expected to maintain production volumes by adjusting procurement strategies.

Export Prospects for Ukraine in 2025

Ukraine’s sunflower oil exports may face challenges due to rising input costs and limited raw material availability. However, strategic planning and diversified sourcing can mitigate potential losses.

Three Main Challenges for Ukraine in 2025

1. Climate-induced production volatility.
2. Regional disparities in sunflower yields.
3. Rising procurement costs for raw materials.

Three Main Opportunities for Ukraine in 2025

1. Expanding procurement regions to stabilize supply.
2. Contractual cooperation with farmers to secure raw material.
3. Optimizing production to maintain competitiveness despite rising input costs.

Sunflower Yield and Price Comparison in Ukraine (2022–2025)

Звичайно 👍 Ось таблиця з перекладом англійською:

📊 Sunflower Prices Dynamics in Ukraine (Processing Market, 2022–2025)