The sunflower usage as feedstock of biofuel is almost null, if compared to palm, soybeans and rapeseed crushing numbers, which are extensively used to fulfill mandatory mandates in several countries around the world, like Brazil, Argentina, India and UK. This means that the drop in oil prices observed in the period of March-May this year did not impact the demand for sunflower oil, unlike the other oils mentioned, which suffered a retraction in the industry consumption. At the otherhand Sunoil, whose main usage is on human consumption, was strengthened during Covid-19, therefore it has been supporting the sunflower escalade due to consumption trends in households. Inverted correlated to the palm and soybean oils, largely demanded by the HORECA channels, severely damaged by the social confinement.
In addition, countries like China and India, which until a few years ago had a very sensitive inelastic demand for sunflower oil due to the improvements in the life quality had maintained the demands almost as steady.
On the supply side, a world record sunflower harvest is projected on 20/21, as a result of a strong increase in the area of the three main producing countries: Russia, Ukraine and Argentina. This coupled with productive declines in palm production due to labor force shortage in Malaysia and a prolonged drought last year in Southeast Asia, resuming less appealing palm product to go by, and yet low balance stocks for soybean and rapeseed, and new lockdowns coming into place again, put sunflower in a hiking mood.
At the local level (Argentina), the sunflower surpassed US $ 400 this week for delivery in March, with strong competition between factories and seed exporters, boosting the sales of the producer. Having an uptrend price increase at U$ D 10-20 at a weekly basis.
Key factors to follow the oilseed price should be the events caused by the La Niña phenomenom and its impact on soybean production in South America and how palm in Southeast Asia will bahave.