Sunflower Oil Prices Begin To Fall Amid an Ease in Bullish Sentiments and a Lacklustre Demand

Sunflower oil prices have rallied since the end of February when the Russia - Ukraine war started. An initial panic created bullish sentiments and pushed oilseeds and sunflower oil prices up to record highs. The Black Sea region alone produces about 60% of global sunflower oil and supplies about 75% of all global exports.

Initial disruption to supply chains in the first quarter of the year owing to the conflict caused significant uncertainty to global oilseeds supplies. Crush facilities closed and those that were opened operated below capacities. Ports in Ukraine also suspended operations causing general tightness to the market and impacting the oilseed trade - buyers thus struggled to get sunflower seed and sunflower oil to cover their exposures.

Before the conflict, traders and buyers were already grappling with bullish sentiments coming from both palm oil and the soy oil market-Indonesia limited the exports of some cooking oil while adverse weather in South America had also caused a downward revision in output numbers. These added to the price support while the conflict increased the risk premium in sunflower oil prices.

European oilseed sunflower export prices were at $700/mt in February but by March, they had risen (+42%) to 1000/mt and continued to rally to a little under $1100/mt in April. The US sunflower oil export price from the Gulf of Mexico similarly was trading at $1500/mt in February and ended March a greater (+860) dollar up to $2360/mt.

In the second half of the year, oilseed sunflower and sunflower oil prices have begun to come down. Complicated as it seems, port closures and an attack on some oil terminals have meant there's been a piling up of stocks in Ukraine and less domestic demand which is pushing domestic prices down.

Supporting the downward movement in prices is Chinese vegetable oil demand - China cut its sunflower oil imports in the month of May by a whopping 87% YoY from 126,000 mt in May 2021 to 26,000 mt this year. Sentiments from the talks between Russia, Ukraine, Turkey, and the UN with the aim of finding ways to open supply chain operations are pressuring prices.

Also pushing prices down is the ease in panic sentiments. According to Tridge Engagement Manager Ecenur Bilgin a specialist in the oilseeds market, “there is no more panic about sourcing the oil, suppliers and buyers are finding a way to send the goods even from Ukraine”. At this point in time, she added, “there is demand but also, there is supply so probably we won’t see crazy prices”.

The truism in this is that already, we have seen prices pushing down both on the domestic Ukrainian market and in other markets so much so that, Ukrainian farmers have reserved their selling of oilseed sunflower. Demand from international buyers has also been lacklustre with very low bids over the past weeks.

The European oilseed sunflower export price has since come under pressure, falling to a flat $1000/mt. The US sunflower oil export price from the Gulf of Mexico also closed at $2000/mt in May down from $2280/mt in April.