Farmers in Black Sea countries are making more money from planting sunflower seeds, helping boost the outlook for record global production.
Output in the 2016-17 season may rise as much as 11 percent to 47.5 million metric tons as supply in top growers Ukraine and Russia increases, according to Sunseedman, a brokerage and consultancy in Edirne, Turkey. That’s up from a June estimate of 45 million tons.
Farmers in the two countries are planting more of the seeds, which are eaten as snacks and used to garnish dishes and make oil for cooking, because they’re more profitable than some other crops. With Russia able to process more seeds than it grows, Agriculture Minister Alexander Tkachev last week called for farmers to sow more oilseeds. Weather in both nations has also been favorable for crops, Sunseedman’s founder Veysel Kaya said.
“The main reason, of course, is enlarged acreage,” Kaya said, referring to the raised output forecast. High demand for seeds from crushers in Ukraine and Russia “means more investments and more production year by year,” he said.
Estimates for planted areas are getting bigger. UkrAgroConsult, a Kiev-based market researcher, raised its outlook for this year by 1.6 percent to 6.3 million hectares (15.6 million acres) last week. Russian farmers sowed sunflowers on 7.5 million hectares this year, Federal Statistics Service data show. That’s about 6 percent above a June estimate from the Agriculture Ministry.
While yields are expected to be lower than when Russia reaped a record crop in 2013, the planted area will be bigger, Daniil Khotko, an analyst at the Institute for Agricultural Market Studies in Moscow, said by phone. Ikar, as the consultant is known, expects farmers to harvest as much as 10.1 million tons, 4 percent more than previously expected.
Prices paid to farmers in central Russia rose 31 percent from December 2014 to late July, according to data from Moscow-based consultant SovEcon compiled by Bloomberg. Prices for fourth-grade wheat, the most popular variety in the biggest exporter of the grain, dropped 20 percent in the period, the data show.
“In Russia, farmers even reduced sowings of corn to the benefit of sunflower seed in 2016 due to more lucrative returns,” said Artem Serzhenko, an analyst at Hamburg-based researcher Oil World. While the outlook for more output has started to pressure prices, global shortages for rapeseed and rapeseed oil will prompt more demand for sunflower products as an alternative, he said.
Russia produces about 14 million tons of oilseeds each year, though has the capacity to process 20 million tons into cooking oil, Tkachev said.
Ukraine is the biggest exporter of sunflower oil, mostly shipping to India, the European Union, China, Egypt and Turkey. Russia’s markets are more limited, supplying the product mainly to Turkey and Egypt, Sunseedman’s Kaya said.
Farmers in Argentina, the world’s third-biggest producer, have probably dedicated a larger area to sunflower seeds after the government canceled an export tax, boosting demand for its supplies, according to Sunseedman.