Vegetable Oil Producers Are in Crisis: Farmers Do Not Sell Raw Materials

The vegetable oil market in Ukraine is in an unprecedented situation. Producers cannot purchase raw materials for production, since farmers expect maximum sunflower prices, and do not create supply on the market with a rapidly growing demand.

The reasons for this situation are associated with high prices for sunflower oil last season. In the 2020-2021 season, the oil price reached $ 1,700 per ton on a FOB basis. The peak was registered in March 2021, and only by the summer, it fell to $ 1050 per ton. During this period, the consumption of the product decreased, as consumers began to massively refuse to buy it due to the high cost. As a result, a situation developed in which the farmers sold the material at a high processing price, and the end consumer refused to buy the finished product, which made the producers losers.

In the 2021-2022 season, the situation is even worse for manufacturers. Farmers do not create an offer, expecting a peak price of 23-25 ​​thousand hryvnia per ton of sunflower. The accumulated stocks for the period of the end of the 2020-2021 season allow them to wait. However, retailers are not ready to buy ready-made oil at a high price, as there are risks that consumers will refuse to buy an expensive product again. Because of this, manufacturers are faced with a serious problem.