Ukrainian Sunflower Situation: Lower Harvest, Port blockades, Oil Export Squeeze, and the Global Scramble for Sunflower Oil.

Published 2022년 6월 7일

In 2021, Ukraine’s oilseed sunflower production was 17 million mt, 3 million up on the previous year. Export of sunflower oil also was 6.1 million mt, a massive 22% increase YoY. This year, however, Ukraine’s oilseed market has been is facing major difficulties. Ukraine’s Black Sea ports used for its food crops export are facing major blockades.

Ukraine is the foremost oilseed sunflower and sunflower oil producer in the world and the world's biggest sunflower exporter. In 2021, Ukraine’s oilseed sunflower production was 17 million mt, 3 million up on the previous year. Export of sunflower oil also was 6.1 million mt a massive 22% increase YoY. This year, however, Ukraine’s oilseed market has been beset with major difficulties leaving it with loads of sunflower seeds unable to be moved. Also, the 2022 crop is also forecasted down 44% to 9.5 million mt a significant shortfall for the 2022/23 crop season.

Ukraine’s Black Sea ports are used for its food crops exports. Rail freight and HGVs with tons of oilseeds and a lot more sunflower oil arrive at black Seas ports to be shipped to Europe, Asia, and the Middle east. However, there is currently a blockade of ports which is curtailing supplies consequently. Although the country is working on opening new corridors, the capacities of alternative transportation routes and mediums are inadequate.

Amidst the logistical constraints, available Ukrainian oilseeds sunflower and sunflower oil is struggling to find their way into export destinations. Sunflower oil prices, wherever it is traded have soared reaching almost $2350/mt in the middle of March. Although prices have come down in recent weeks, they are high looking at the long-term price trend.

Currently, farmers are preparing fields for the 2022 plantings, but reports suggest about a third of the normal planting acreage could be lost on the back of the effects of the ongoing conflict in the region. APK-Inform estimates sunflower plantings for the 2022 harvest to fall to 4.4 million ha. Down 35% and the lowest in more than a decade. The reason for this is that there is continuous military activity in the main sunflower growing areas in the country. The 2022 crop is thus forecasted at 9.5 million mt, 7.5 million off the 2021 crop and further deepening the already bullish sentiments in the vegetable oil mix.

Again, a rebound in demand for vegetable oil and sunflower oil globally has been at a pace not seen in the recent past. The demand for sunflower oil, used as cooking oil in the food services sector has been robust. Demand for the oil from the biodiesel sector mainly in Europe has also been strong adding upward pressure to sunflower oil prices. Overall, the sunflower oil market may stay heated with significant upside risk for the rest of the current season.