Oilseed processing plants in Ukraine halting operations or switching to rapeseed and soybeans on sunflower shortage — Repetskyi

Sunflower is currently being processed mainly by plants that purchased supplies back in March and April. Facilities that did not secure enough raw materials during that period are now either suspending operations or switching to processing remaining rapeseed and soybean stocks, Serhii Repetskyi, co-founder and partner at Sunstone Brokers, told Latifundist.com in an interview.

“At current sunflower prices, there is no processing margin. For many plants, it is actually more profitable to stay idle than to keep processing. When a plant is idle, it still has fixed costs — roughly $9–10 per ton. These include staff salaries and other fixed expenses,” he said.

According to Repetskyi, operating under current market conditions can result in losses of $20–25 per ton.

“So the question is simple: why generate a $20–25 loss if you can limit losses to $9–10 by standing idle? In this situation, suspending production looks economically more rational for some processors than operating at a loss,” he noted.

Ukraine still has limited rapeseed stocks available, so processors unwilling to buy sunflower at UAH 33,000–34,000 per ton are switching to rapeseed. In addition, rapeseed oil prices at the Polish border currently allow processors to remain profitable.

“There is no margin in buying sunflower at these prices. Only plants with a longer value-added chain and integrated meat or dairy businesses can afford it,” Repetskyi added.

He also believes that the remaining sunflower stocks on the market are mostly held by mid-sized farmers, although they are unlikely to keep them for much longer. The first half of June may become the period of final stock sales ahead of the rapeseed and barley harvest campaigns.