UKRAINE BUMPER CROP OF SFS IN 2016/17 AND SUNFLOWER OIL MARKET DEVELOPMENT Speaker: SVITLANA SYNKOVSKA, Marketing Director APK-INFORM AGENCY

Highlights of the presentation Global trends on sunflower oil market Ukrainian sunflower oil – way to the leadership What to expect in the new season 2016/17? Conclusions

Global trends on sunflower oil market

Sunflower oil market makes huge support to the domestic growing of sunflower seed World SFS production increased by 34% during 2006-2015 (10 years) and to increase further in 2016 by 8% y-o-y – to 43.7 Mln MT. In particular, Ukraine more than doubled its crop. The country produces 1/3 of global volume. At the same time SFS production in Russia rose 45%, in Argentina depreciated by 23% for 10 years. Source: USDA, November 2016

World Production and Export of Sunflower Oil Currently 53% of globally produced SFO is traded all around the world against just 38% 10 years ago. SFO production increased by 44% during 2006-2015 and to increase further in 2016 by 8% y-o-y – to 16.74 Mln MT. Its export is growing even faster: +100% for the period and +9% y-o-y in 2016 – to 8.8 Mln MT. Source: USDA, November 2016

World Production and Export of Sunflower Oil Ukraine alone accounts for 1/3 of total SFO production and avg. 55% of its export globally. 2016/17 F Source: USDA, November 2016

Strong demand for SFO globally contributed to expansion of import geography Import in 2016/17 F (10-year change) Traditional “old” markets New markets 1. India 2. European Union 3. Turkey 4. China 6. Iraq 5. Iran 7. Egypt 8. South Africa 9. Saudi Arabia 10. Kazakhstan 1.8 Mln MT (+9 times) 850 Th MT (+9 times) 400 Th MT (+2 times) 400 Th MT (+14 times) 150 Th MT (+2%) 140 Th MT (+3.7 times) 135 Th MT (+3.6 times) 1.3 Mln MT (+7%) 890 Th MT (+6 times) 350 Th MT (+12 times) Source: USDA, November 2016

Ukrainian sunflower oil – way to the leadership

What are the main competitive advantages of the Ukrainian sunflower oil? Favorable geographic location of the country Growing crushing industry and infrastructure Logistics – development of veg oil terminals Low state regulation Good quality and attractive price Measures to improve effectiveness of the crushing process (energy saving by burning of produced husk) and costs reduction

Ukraine is the world leader in Sunflowerseed Production SFS production in Ukraine increased by 50% during 2010-2015 and is forecasted to reach new record in 2016 – 13.9 Mln MT (+16% y-o-y). record Source: APK-Inform, November 2016

PSD Balance of Sunflower Seed and Oil in Ukraine Export of SFO is the driver for market, while domestic consumption is reducing Source: APK-Inform, November 2016

SFO Production and Export In Ukraine – up & up SFO market in Ukraine continues to be one of the most growing. Production and export are forecasted to rise to the record highs in 2016/17. Production increased by 56% during 2010-2015 and to increase further in 2016/17 by 16% y-o-y – to 5.7 Mln MT. Export increased by 70% during 2010-2015 and to increase further in 2016/17 by 16% y-o-y – to 5.2 Mln MT. records Source: APK-Inform, November 2016

Share of Ukrainian sunflower oil in global exports rose sharply Ukraine is the biggest player on the world SFO export market, far ahead its competitors. In 2016/17, the country ‘s share to reach 57% in global SFO export against 46% in 2006/07. Source: USDA, November 2016

Key destinations for the Ukrainian SFO: ASIA – 50% Incredibly high and rapidly growing import demand from India made it №1 market for Ukraine with the share of 31% in total exports 2015/16 China – “breakthrough” since 2013, 2nd place in Ukrainian exports Source: APK-Inform, November 2016

Key destinations for the Ukrainian SFO: EU – record high 30% Free trade zone with EU promoted export from Ukraine in 2015/16 to 1.4 Mln MT – up 2.3 times y-o-y Source: APK-Inform, November 2016

Key destinations for the Ukrainian SFO: Middle East – record low 15% Turkey keeps on strong import of SFO Supplies to Egypt reduced twice during 2010/11-2015/16 due to SBO & CPO higher usage Iran & Iraq – complicated but perspective markets Source: APK-Inform, November 2016

Ukraine: TOP-15 importers of SFO 2010/11 (Sep-Aug) VS 2015/16 (Sep-Aug) № Country Export volume '000 tons Share % 1 India 717 27% 2 Turkey 309 12% 3 Egypt 213 8% 4 Netherlands 195 7% 5 Russia 151 6% 6 Italy 146 5% 7 Spain 112 4% 8 Belarus 73 3% 9 Syria 67 10 Saudi Arabia 64 2% 11 Georgia 60 12 UAE 46 13 Sudan 44 14 United Kingdom 42 15 Uzbekistan 39 1%   Others 374 14% TOTAL 2 652 100% № Country Export volume '000 tons Share % 1 India 1415 31% 2 China 621 14% 3 Spain 383 9% 4 Netherlands 377 8% 5 Italy 285 6% 6 Turkey 177 4% 7 France 151 3% 8 Iran 143 9 Malaysia 131 10 Egypt 96 2% 11 Lebanon 71 12 UAE 68 13 United Kingdom 66 1% 14 Saudi Arabia 62 15 Sudan 49   Others 406 TOTAL 4 500 100% Source: APK-Inform, November 2016

Ukraine: TOP-15 exporters of sunflower oil 2015/16 (Sep-Aug) Source: APK-Inform, November 2016

What to expect in the new season 2016/17?

Monthly Prices of Vegetable Oils and Brent Crude Oil in Europe Traditionally sunflower oil has a price premium over other vegetable oils. However 2016/17 started from the tendency of price spread reduction among veg oils. That is explained by bumper SFS crop in the world. Source: APK-Inform, November 2016

Monthly Prices of Sunflower Oil: origin comparison Price premium between SFO of different origin also reduces. That will result in stronger competition between suppliers on this market. Source: APK-Inform, November 2016

Global SFO Export Resume 2016/17 Forecast Ukraine (APK-Inform) 5.2 Mln MT +16% y-o-y Russia 1.5 Mln MT +15% y-o-y Argentina (USDA) 550 Thsd MT -8% y-o-y Turkey (USDA) 550 Thsd MT -6% y-o-y EU-28 (USDA) 350 Thsd MT -3% y-o-y

Global Factors of Influence the Market Record oilseeds crop Lower crude oil prices Weather factor - drought risk in South America US Dollar weakening

Conclusions Bumper SFS crop in the Black Sea Region in 2016/17 will allow to reach record SFO production to meet growing international demand. Out of forecasted 16.7 Mln MT of SFO production, Ukraine will produce 5.7 Mln MT or 34%. World export of SFO in 2016/17 to reach 8.8 Mln MT, out of that 57-60% (5-5.2 Mln MT) will be supplied by Ukraine. The country has great potential to progress. Bumper SFS crop in 2016/17 contributed to price spread reduction between SFO and other veg oils. That can increase SFO competitiveness and its import by price-sensitive markets.

Thank you for attention! Svitlana Synkovska promo@apk-inform.com