Sunflower prices robust despite gigantic crops in the Black Sea Region

Published 2021년 9월 29일

Russia planted an incredible 9.64 million hectares of sunflowers earlier this year, the largest on record. Adverse weather throughout the season shattered their hopes of overtaking Ukraine as the world’s largest sunflower producer for the second time in three years. Despite the sunflower crop not living up to expectations, the total Russian oil crop will likely still be a record 22 million MT, thanks to an expansion in soybean and rapeseed production. Notwithstanding these vast crops, sunflower prices are finding support from sufficient oil crushing capacity in Russia and Ukraine, and the expectation that export demand will remain strong. Local prices are USD 515/MT in Russia’s Volga region, 25% higher than a year ago.

Record sunflower crop for the Black Sea region

The Black Sea region is expected to produce a record 40 million MT of sunflowers this season. High prices, when the planting season started in April, prompted farmers to plant more oilseeds, with sunflowers at the forefront. Ukraine and Russia are the top producers by far, with crop estimates of 17 million and 15 million MT respectively. Romania’s harvest could be 3 million MT, and that of Bulgaria 2.2 million MT, which combined is around 30% more than last year. Even Turkey is expected to harvest a record 1.8 million MT tons of sunflowers this year.

Source: UkrAgroConsult, AgriCensus

Fierce competition between Russia and Ukraine sunflower growers

The Russian sunflower crop has long played second fiddle to that of Ukraine but finally overtook them in 2019, being a mere 125,167 MT higher than Ukraine’s 15,254,120 MT. When the 2021 season started, record sunflower plantings in Russia signaled that they might beat Ukraine once again. Initial crop estimates were more than 16 million MT, however, the weather didn’t play along and the crop was ravished by drought late in the season, especially in the Volga region. Current crop forecasts range between 14.5-16.0 million MT with the most up-to-date forecast at 14.8 million MT from the Prozerno analytical center. Yields could be as low as 1.55MT/ha, compared to the 5 year average of 1.60MT/ha. This will still be the second-biggest crop, after the giant 15.4 million MT harvested in 2019, owing to the large area planted.

Ukraine on the other hand had favorable weather conditions throughout the season and will retain its title as the top sunflower producer. The crop will most likely smash all previous records and come in at 17 million MT, dwarfing the previous record of 15.3 million MT harvested in 2019. Yields this year will be lower than 2019’s impressive 2.56MT/ha, but is still a mighty 2.53MT/ha.

Source: FAO, UkrAgroConsult

The harvest is in full swing, with some concerns about early snow

The sunflower harvest in Russia is underway and around 22% of the crop had been harvested on 20 September. Even though progress is similar to last year, there could be more drama as snow is forecast over the next few weeks. There are concerns that up to 600,000 ha might not be harvested before snow hits and that this could reduce yields even further. This means there is still some downside risk to the 14.8 million crop estimate. This is countered by yields as high as 1.71MT/ha on the 2.1 million ha that has already been harvested.

Still a record oilseed crop for Russia

Despite the sunflower crop not delivering on its initial promise, increased soybean and rapeseed production will push the total oilseed crop to a record 22 million MT. Soybean production in Russia has been increasing rapidly. The current soybean crop is estimated at 4.5 million MT, and the harvest is already a quarter of the way, with yields of 1.64MT/ha (1.89MT/ha in 2020). The rapeseed crop should reach 2.9 million MT, from last year’s 2.6 million MT. The rapeseed harvest is already more than 65% complete.

Source: FAO, UkrAgroConsult

Prices are underpinned by strong demand from crushers

When the sunflower planting season started in April this year, domestic prices peaked at around USD820 / MT, following tight supplies and some areas where planting was delayed. This even prompted Russia to take measures to curb their rising food inflation, and one of these measures was to impose a 50% export duty on the export of sunflowers from the 1st of April to the 31st of August, and an export duty of USD169.90 per MT on sunflower oil, starting on the 1st of September. This subdued sunflower prices to some extent in the summer months. Prices were pressured further as it became clear the total area under oilseeds was more than 14 million ha, 12% higher than a year before. More recently, prices are finding some support despite harvest pressure. Russia and Ukraine have sufficient crushing capacity for their giant crops and export demand of oilseeds and oilseed products are expected to remain strong. Currently, local sunflower prices in Russia are USD 515/MT, 25% higher than a year ago.