Soybean and sunflower production profitability in 2018 lowest over five years

In 2018, Ukrainian agricultural producers received the average profitability of sunflower and soybean production at a 5-year minimum level — 32.5% and 21%, respectively, the APK-Inform consultancy reports.

According to Julia Ivanitskaya, the oil markets analyst at APK-Inform, that was the result of the increase in oilseeds supply contributing to the decrease in 2018/19 procurement prices.

The soybean price decline was more significant, as the world economic situation also had a negative impact: global overproduction of soybeans, high stocks, the trade war between the USA and China, as a result of which the latter significantly reduced imports and consumption of soybeans, the analyst notes.

"The 2018/19 season, which ended in August, was marked for the oilseeds segment of Ukraine by record volumes of sunflower and soybean products export. Taking into account the existing capacity of the domestic market, it is export indicators of processed products that are the main reference point in assessing the volume of raw materials," she noted.

As a result, sunflower production in 2018 stood at 15.2 mln t, up 12% YoY. Almost 4.8 mln t (+14%) of soybeans were harvested, taking into account the final appraisal. For both crops, maximum yields were achieved due to increased productivity, and as for sunflower — an increase of the sowing areas also played its part.

As a reminder, world sunflower oil trade in Q4 2018/19 declined seasonally, at the same time exceeding last year's level due to a combination of high product supply in major supply countries and strong demand from key importers.