New
Transform your trade strategies with Market Brief, Tridge’s AI-powered market insights.

EU Sunflower Oil Market Situation Vis-à-Vis Conflict in the Black Sea Region

image
The latest report from the EU Commission on seed oils showed the 2022 EU oilseed sunflower stocks are at 0.9 million mt, 50 thousand metric tonnes less than the 5-year average. Production for 2022 is also projected by the Commission to be 11.2 million mt, marginally lower than in the previous year. Although the EU stock level is somehow ample, the loss in Ukrainian commodities on the EU market on the backdrop of the ongoing conflict has the startled EU oilseeds market.

The latest report from the EU Commission on seed oils showed the 2022 EU oilseed sunflower stocks are at 0.9 million mt, 50 thousand metric tonnes less than the 5 years average. Production for 2022 is also projected by the Commission to be 11.2 million mt, marginally lower than in the previous year. Although the EU stock level is somehow ample, the loss in Ukrainian commodities on the EU market on the backdrop of the ongoing conflict has the startled EU oilseeds market. The situation initially affected prices, pushing EU sunflower oil prices up.

Russia and Ukraine account for more than half of the world's sunflower oil exports while refineries in the EU source about 40% of their sunflower oil feedstock from Ukraine. Since the conflict started, Ukraine has had to shut some of its ports which it uses to export sunflower oil to the EU and other importing countries. This already has had some effect downstream. Against this backdrop, supplies of sunflower oil in the EU have been relatively unbalanced causing crushers to use some imports from South America.

In the last few weeks, however, reports suggest there is some light at the end of the tunnel. The European sunflower oil situation has improved. Ukrainian exporters have found new ways to send oilseeds and crude sunflower oil across by resorting to moving supplies by rain and truck. Although the stocks hauled by rail and road freight falls far short of that that hitherto went by sea, in the short term this remedy is better than nought. Against this backdrop, Rotterdam prices have been kept quiet. Helping to keep a lid on the sunflower oil process in the EU is Russian exporters who are selling oilseed sunflower and sunflower oil at a discount to clear out their available stocks.

The biodiesel industry has also resorted to using alternative oils and limited the use of sunflower oil as a feedstock for biodiesel production. Some retailers have also devised a new way of taking out sunflower oil from their products by reformulating their product recipes to use rapeseed oil, soybean oil or animal fats and oils. In the food services industry, sunflower oil is reportedly being replaced with other edible oils that are readily available. Some crushers are also using sunflower seed imports from South America.

Going forward, the uncertainty surrounding the availability of sunflower seeds and oil within the oilseeds mix will persist in as far as the conflict in the Black Sea continues. Sunflower planting progress in the EU will also be the focus as its progress and the yield turn will be the one factor that may remove some of the inflationary pressures out of the sunflower oil market.

By clicking “Accept Cookies,” I agree to provide cookies for statistical and personalized preference purposes. To learn more about our cookies, please read our Privacy Policy.