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Kernel oil seed crushing volumes swell 22% yoy in 3QFY17

Bulk sunflower oil sales at Ukraine’s largest sunflower oil producer Kernel (KER PW, KERPW) declined 8.2% yoy in 3QFY17 (January-March 2016) to 294 kt, but nonetheless increased 3.5% yoy to 775 kt in 9MFY17, the company reported in its April 20 trading update. Grain exports declined 1.7% yoy in 3QFY17 to 1.39 mmt, yet improved 11.9% to 3.7 mmt in 9MFY17. Kernel’s port terminal throughput gained 9.7% to 1.6 mmt in 3QFY17 and grew 7.7% to 4.7 mmt in 9MFY17.


The company’s oilseed crush volumes swelled 22.2% yoy to 862 kt in 3QFY17, driven by nearly full crushing plant utilization on the back of a record sunflower seed harvest in Ukraine. In 9MFY17, oilseed crush volumes remained flat at 2.0 mmt, or a 0.6% yoy increase.


The company reported that its winter wheat and rapeseed are in good condition, and that the spring sowing campaign is ongoing. Total planned acreage for FY2018 is planned for 381,900 hectares, compared to 385,600 hectares last year.


Igor Zholonkivskyi:  After weaker seed crushing volumes in 1HFY17 caused by an interim deficit of sunflower seeds on the domestic market, Kernel's 9MFY17 results managed to recover due to strong 3QFY17 figures and an ample supply of sunflower seed. We think Kernel should now be able to achieve its initial guidance of crushing volumes of 2.9 mmt for FY2017, which would be a 7.4% yoy increase. 


We also found indirect confirmations that Kernel might be now in the final stages of negotiations on acquiring about 150,000 ha of additional land bank. We expect the company will provide some official information on this matter on May 30, the day when its 3QFY17 financial results are released.

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