W8 Sunflower Update: Global Sunflower Output May Fall Short of Consumption, Russian Sunflower Oil Projections Revised Down for 2023/24 MY Despite Increased Harvest

Published 2024년 3월 2일

In W8 in the sunflower oil landscape, global sunflower output may fall short of consumption by around 749 thousand mt, leading to closing stocks of approximately 3 mmt for the 2023/24 season. While sunflower seed planting in the EU is expected to cover a similar area as the previous year, projection adjustments for sunflower oil production and exports in Russia reflect uncertainty in the market. Despite a decline in global vegetable oil prices impacting sunflower prices in Ukraine, the country saw an increase in sunflower processing, with Germany reclaiming its position as the top destination for Ukrainian agricultural exports.

Global Forecast: Sunflower Output May Fall Short of Consumption Estimates

Global sunflower output may fall short of the indicated consumption of 55.8 million metric tons (mmt) by 749 thousand metric tons (mt), potentially resulting in closing stocks of around 3 mmt for the 2023/24 season. In the European Union (EU), sunflower seed planting is expected to cover a similar area as the previous year, with 4.9 million hectares (ha) allocated. Dry weather or excessive rainfall may have caused some loss in the autumn sowing area, which could be compensated by planting sunflower seeds, particularly in Bulgaria, Romania, and France.

Russian Sunflower Oil Projections Revised Down Despite Increased Harvest

Projections for sunflower oil production and exports in the 2023/24 marketing year (MY) in Russia were lowered from 7 to 6.8 mmt and from 4.6 to 4.3 mmt, respectively, despite an actual increase in the gross harvest of sunflower. This adjustment reflects uncertainty in the market regarding the strategies of oil and fat companies amid growing raw material supplies for processing. While some remain optimistic, suggesting that Russia could become the top exporter of sunflower oil next season, the range of opinions indicates a lack of consensus in the market.

Expanding Sunflower Cultivation in Russia: Foreign Breeder Influence

Russia has seen a substantial expansion in the area dedicated to sunflower cultivation over the past three decades, growing three to four times larger. This growth was due to the active involvement of foreign seed producers, who have been ahead of their Russian counterparts in innovation and variety development. Despite this, domestic producers have managed to maintain a 25% share of Russian-bred sunflower varieties. The profitability of sunflower cultivation in Russia has led farmers to frequently replant sunflowers on the same fields within shorter intervals of three to four years rather than the recommended 8 to 10 years. However, data indicates that in 2023, only two Russian hybrids, Krechet and Yenisei, made it to the top 10 most popular sunflower hybrids in terms of sowing volumes, with foreign-bred varieties dominating the market.

Ukraine Sunflower Prices Declined Amid Global Oil Price Drop

The decrease in global vegetable oil prices, with ample raw material stocks at processing facilities and subdued export demand, has contributed to a decline in sunflower prices in Ukraine. Despite stable demand for sunflower oil internationally, domestic demand prices in Ukraine have dropped, reaching USD 735 to 740/mt with delivery to ports and USD 780/mt with delivery to Bulgaria. In Jan-24, Ukraine reduced sunflower processing by 10% month-on-month (MoM), reaching 1.4 mmt, yet it remained 36% higher year-on-year (YoY). Overall, sunflower processing in the 2023/24 season increased to 6.5 mmt, exceeding the previous year's rates by 9% and accounting for 53% of the forecasted processing volume for 2023/24 MY.

Germany Regains Top Spot in Ukrainian Agricultural Exports Led by Sunflower Oil

Germany yielded its top position in Ukrainian agricultural exports to Romania in 2022. However, it has now reclaimed its leading position, constituting 16.2% of Ukrainian exports in this category. Sunflower oil remains the top export product in the oils and fats group. Ukraine exported 5.7 mmt of sunflower oil during 2023, marking a 34% YoY increase. Despite the surge in export volume, revenue from sunflower oil sales amounted to USD 5 billion, reflecting an 8% YoY decrease.