Sunflower Prices Rebound on a Revised Production Forecast and Lower Exports From Key Black Sea Area Suppliers

The world exports of sunflower seeds' Free On Board (FOB) prices have rebounded after staying low for most of April into the end of H2-2023. Sunflower seed-EU Bordeaux and Sunflower seed-Ukraine both took a downturn at the start of the year and continued on that trajectory until the end of March. Both indices were buoyed by strong planting in the European Union (EU) and Ukraine and a weaker vegetable oil price market.

However, prices have seen a rebound since the end of March: the Bordeaux benchmark moved from its yearly low of $433 per ton to $511 per ton. It then took a bit of steam out of the market before edging higher slowly to the current price of $496 per ton. The Ukraine export price benchmark has also had its own movement, but the price direction in June has been parallel: it moved lower from $425 in mid-March to $330 at the end of May before rebounding to the current $345 per ton.

The current price recovery is driven by a revised 2023-24 global production forecast. The global sunflower crop has been revised down to 54 million metric tons (mt) from the initial forecast of 54.8 million mt due to revisions in China. Earlier in March, when planting of the current crop was ongoing, an expected return to near-average yield levels caused agronomists and industry players to put the figure at high. Still, an unexpected YoY reduction in China is cutting the forecast.

Lower exports from key producers Russia and Ukraine are also aiding in keeping prices up. There has been a reduction in exports from the Black Sea region since April, causing markets to be slightly tight, but other oilseed prices have prevented sunflower seed from going up. However, the tension in that price hesitation has been broken, causing the sunflower seed to push slowly up.

Adding to this, India, the world's top vegetable oil buyer, has stepped up its vegetable oil purchases from Ukraine, Indonesia, Malaysia, and other vegetable oil-producing countries, but offers in Ukraine have been insufficient. With the recent low vegetable prices, crush margins have also not been great, making the market somewhat complicated.

Another factor adding to the pressure is the EU Commission ban: the European Commission's ban on Ukrainian sunflower seed exports from April 28 to June 5 to some of its member countries after several complaints squeezed the crop supply chains and made it unavailable for six weeks. The market has thus been heated, and prices are moving up.

Although the EU crop is expected to go up 10% on the long-term average to 10.8 million mt according to a recent report, EU sunflower seed prices are also on a bullish momentum now. Every bearish sentiment around has been priced in, so we may continue to see world export prices trading within that tiny range for the rest of this quarter.