W27: Sunflower Update
In W27 in the sunflower oil landscape, the surge in soybean and palm oil prices on the Chicago Stock Exchange on July 7 provided support for sunflower oil prices. This resulted in a 1.7% increase to USD 895/metric ton (mt) delivered to buyers on July 3, contributing to a 7% WoW increase. Refiners scaled back sunflower oil sales due to further vegetable oil price hike expectations, but the ample supply of rapeseed and sunflower oil in the European Union (EU) market dampens hopes for a substantial demand increase from European buyers. Moreover, the Black Sea port blockade hinders the Ukrainian sunflower oil delivery to India and China. Stratégie Grains lowered the 2023/24 EU sunflower harvest estimate by 0.4 million mt (mmt) to 10.9 mmt. Nonetheless, this projected 2023/24 EU sunflower volume remains higher than the 9.2 mmt harvested in the 2022/23 season.
Ukrainian sunflower oil in Jun-23 amounted to 476 thousand mt, an increase of 5.08% MoM. It exceeded the market expectation, remaining high despite a significant reduction in sunflower stock in Ukraine. Ukrainian sunflower oil shipments were mainly destined for Romania, Turkey, and India. Overall, Ukraine witnessed a notable increase in sunflower oil exports during the 2022/23 season, rising from 3.8 mmt to 4.7 mmt compared to the same period in 2021/22. With two months remaining in the 2022/23 season, it is possible that total 2022/23 sunflower oil exports could reach 5 mmt.
In Russia, sunflower prices are rising, despite high stocks and an early end to the season due to plant design works and the transition to other crops. This price increase is occurring against the backdrop of a surge in oil prices, allowing factories to enjoy comfortable profit margins. Some factories are even willing to purchase sunflowers at higher prices at present as they are cushioning themselves against potential overpayment in the coming months. The overall trend in the traditional oils market is bullish, driven by growing export activity following the price bottom from Apr-23 to May-23, an increase in biodiesel consumption, and mounting concerns about the upcoming harvest in the Northern Hemisphere.
