Ukraine’s sunflower seed exports might soar to more than twice last season’s record high, blunting a spike in domestic crush margins, Kernel Holding said, in a briefing which made a cautious appraisal of the Black Sea grain deal.

The grain trading-to-sunflower oil group, historically Ukraine’s largest agricultural shipper, reported “mushrooming amounts of sunflower seed exports” from the country, which is usually the world’s top producer of the oilseed.

Indeed, it noted a US Department of Agriculture forecast that shipments will hit 2.45m tonnes in 2022-23, a figure Kernel termed an “unprecedented historical amount”, exceeding the record 1.62m tonnes shipped last season on USDA data.

In fact, the total may be far higher still, with Kernel saying that “considering the ascending monthly trend, and relying on various estimates, sunflower seed exports might exceed 3.5m tonnes” this season, on a July-to-June basis.

Big supplies

That would be a marked upswing from the levels that the country exported before February’s invasion by Russia which, in disrupting Ukraine’s own crushing activity, quelled domestic demand.

In the five years to 2020-21, the last season unblemished by war, Ukraine’s sunflower seed exports averaged 115,800 tonnes per annum, USDA data show.

However, with the country sitting on large supplies after a record 17.5m-tonne harvest last year, and with domestic demand slowed, merchants have scrambled to find alternative buyers for what is a relatively valuable crop.

Ukraine sunflower seed exports were priced at $495 per tonne as of December 7, compared with $272 per tonne for milling wheat, according to European Commission data.

Land or sea?

Shipments through the Black Sea Grain Initiative, under which Russia has agreed to safe passage for ag exports from three Ukrainian ports, have actually been modest, totalling 142,800 tonnes according to the United Nations, which is overseeing the deal.

However, Ukraine’s exports overland and by barge to the neighbouring European Union have soared to 1.15m tonnes for the season up to December 11, compared with 10,274 tonnes as of the same period of last season, commission data show.

That is higher than the EU typically imports from all origins for a full season, for which the five-year average to 2021-22 is just under 800,000 tonnes.

European oilseed processors have been tempted to imports by high crush margins – swollen by the disruptions to Ukraine’s own industry, which have exacerbated a broader squeeze on vegetable oil supplies – and by a disappointing sunflower harvest in the EU itself.

Although EU growers ramped up sowings to 5.15m hectares this year, the highest on commission data going back to 2000, in response to Ukraine’s crisis, output actually fell by 1.0m tonnes year on year to 9.32m tonnes thanks to drought damage to yields in key producers France and Romania.

‘Soaring margins’

Kernel said that its own, Ukrainian crushing plants, most of which it has managed to keep open, had also benefited from the domestic dynamics, with domestic price softness thanks to the large supplies meaning margins “soared 3.6 times year on year”, to $223 per tonne, in the July-to-September quarter.

Oilseed processing division ebitda for the quarter tripled year on year to $45m, despite lower volumes and a 28% dip to $263m in revenues.

However, the drain on domestic supplies from the “mounting exports, in conjunction with the reduction in the harvest this year”, to 10.0m tonnes on USDA estimates, “may sharpen the deficit in the domestic sunflower seed market in the second half of the season”.

This would imply higher seed prices, “negatively affecting the crushing operations’ margins”, the group said.

‘Regular blackouts’

Kernel also flagged a setback from Russia’s latest strategy of attacking Ukraine’s energy infrastructure, which have forced the company to mothball a further two of its eight crushing plants, in addition to the two in the war-torn area of Kharkiv.

“Due to the regular blackouts commenced in October, the group had to temporarily suspend crushing operations on two of its plants in November-December.

“Kernel’s management is currently exploring options in alternative sources of energy to partially secure electricity supply for the oilseed processing operations.”

The group also reported delays to its corn harvest in part thanks to an “inability to harvest at nights due to the curfew… and problems with silos’ intake caused by electricity outages and deficit of natural gas to dry corn”.

Losses thanks to the delays, and to a cut in applications of high-priced fertilizers, prompted the group to downgrade to 7.9 tonnes per hectare it corn yield estimate, compared with the 8.9 tonnes per hectare achieved last year.


The group reported that it had, thanks to the Black Sea Grain Initiative, it had “managed to fractionally recover its export activities”, shipping 732,000 tonnes grains in the July-to-September period, although this represented a sharp decline from the 2.23m tonnes a year before.

However, “while providing a huge relief for export of agricultural commodities from Ukraine, the initiative suffers from inspection delays and congestions,” Kernel said, accusing Russian inspectors of holding up shipments unnecessarily.

“Russian representatives vastly contributed to the bureaucratisation of the export procedures, which resulted in unsustainable day-to-day planning of Kernel’s operational activity, negatively affecting both export and procurement operations of grain.”

Kernel reported group ebitda for the quarter of $168m, down by 40% year on year, with the improved performance in crushing more than offset by slumps in the trading and, in particular, farming divisions.

Group earnings fell by 23% to $162m, on revenue down by 51% to $655m.

Kernel shares, which are listed in Warsaw, stood up 3.3% at 18.36 zloty in morning deals.