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. Last Updated: 07/27/2016

Ukraine Sunseed Rally to End

KIEV, Ukraine - A rally in Ukrainian sunflower seed prices in January is ending as world prices fall, but the downtrend is unlikely to last, traders said Wednesday.

"We are witnesses to a coming decrease in Ukrainian domestic and export sunseed prices that will follow the downward trend across the world," said Olimpex trading house's Mykola Vernytsky. By Jan. 21, local sunseed prices rose to 815/830 hryvnias ($150/153) per tonne from 750/780 hryvnias ($138/144) at the end of December.

Export prices also rose to $175 per tonne as of Jan. 21 from $168 as of Jan. 12.

Traders said the jump echoed sunseed price increases around the world to $233 per tonne in the first week of January (delivery CIF ARAG - northern Europe). But soon after sunseed prices edged down to $212/215.



DOWNWARD PRESSURE SEEN TEMPORARY

Analysts and traders said the downward pressure on local prices would not last long because of the increase in sunseed demand from crushers, whose stocks were shrinking, and exporters.

"A second wave of buying will occur in February-March, resulting in an even greater rise in domestic prices, as well as in a deficit of sunseed supply in March," UkrAgroConsult agricultural consultancy said.

"After the market was flooded with sunseed in October 2000, most crushers collected four to six months of stocks, which now are shrinking under intensified crushing," the analysts added.

Experts forecast that as of Feb. 1, about 1.5 million tonnes of sunseed could arrive at large and medium Ukrainian crushers, whose stocks now might be only 0.35 million tonnes, and that 550,000 tonnes could be exported.

Analysts predict that about 200,000 tonnes of sunseed will be delivered to small local crushers, 60,000 tonnes will be lost and another 55,000 will be used for planting and for other purposes.

"The main limits for price growth will be sunseed arriving from producers, who are believed to have large volume on hand and competition between Ukrainian and Argentinian sunseed on the world market," UkrAgroConsult forecast.

In October-December 2000, Ukrainian sunseed exports totalled 450,000 tonnes but tolling deals dominated.

Last season tolling deals amounted to about 85 percent of such exports.

Tolling is an arrangement whereby the owner of a raw material sends it to a processor and pays for the transaction with a percentage of the finished goods.

Ukraine harvested a record 3.46 million tonnes of sunseed in 2000 compared with 2.75 million in 1999.

Officials have said the country may increase sunseed sales to one million tonnes in 2000/01.

But analysts say sunseed exports could total only 600,000 tonnes this season if tolling deals are banned, an idea the government has raised, which would also cut local prices as the local market soaks up excess supply.

Experts forecast that quiet sunseed trade in January will be replaced by a sharp increase in sales in February, when farms have to sell sunseed to pay for equipment and fertiliser for spring sowing.