Lower Prices Bring Relief For Oilseed Crushers

South African oilseed prices are set to come down from the highs of last year, when the drought seriously affected production, leading to high prices.

- Wessel Lemmer

Last year was a particularly tough year for oilseed and oilcake crushers in South Africa, due to the extremely high prices of soya beans and sunflower seed as a result of the drought.

Low domestic volumes, combined with relatively low international prices for cake meal and oil, placed crush margins under pressure.

Above-average growing conditions and higher planting levels in South Africa, and 38 000t of imported sunflower seeds, led to a decline in sunflower prices, from a high of R6 862/t in June 2016 to R4 490/t in March 2017 (see Graph 1). On 20 March, the domestic sunflower seed price decreased 2,6% week-on-week from R4 500/t to R4 385/t.

These lower domestic sunflower prices brought much-needed relief for crushers, which require minimum throughput levels for their factories to survive. However, crush margins are expected to remain under pressure, as crushers need to compete on the international market, while import parity prices for oilcake and oil are declining due to a stronger rand.

SOYA BEANS