W36: Sunflower Update

In W36 in the sunflower oil landscape, Strategie Grains has reduced its forecast for the European Union (EU) sunflower harvest by 200 thousand metric tons (mt) to 10.3 million metric tons (mmt). Despite this reduction, production is still 10% higher than the 2022 harvest. Dry and hot weather across much of Europe has negatively impacted the potential yields of soybeans, sunflowers, and corn. However, the upcoming week is expected to bring relief in the form of heavy rainfall, which will alleviate the heat and speed up the sowing of winter crops.

The Ukrainian Grain Association has raised its forecast for sunflower seed production in 2023 to 13.9 mmt, higher than the 11.1 mmt in 2022 but lower than the 16.9 mmt in 2021. Oilseed processing is expected to reach 13.2 mmt. Additionally, sunflower prices have experienced a decline of between USD 50/mt and USD 70/mt over the past two weeks due to challenges in exporting through Danube ports and lengthy queues at the Polish border.

In Russia's southwestern region, dry and hot weather affected the potential yields of sunflowers and corn. However, temperatures are expected to drop in W37 before rising again, which should accelerate the harvesting of late crops and the introduction of new crops to the markets. Moreover, it is anticipated that there will be an increase in Russian sunflower production in the upcoming season, as the sown area for sunflowers in 2023 has reached almost 10 million hectares (ha).

Meanwhile, in Moldova's southern region, the harvest of sunflower and corn is catastrophically low, with farmers in areas like Cahul, Cantemir, Bessarabia, and Leova reporting yields as low as 400 kilograms (kg) to 1 mt per ha. This dire situation is attributed to the drought experienced between Jul-23 and Aug-23.

In 2023, Turkey almost doubled its reserves of sunflower oil, which allowed it to significantly increase its exports, while imports will gradually decrease from Aug-23 to Dec-23. In the 2022/23 season (September to July), the country increased sunflower oil imports compared to the previous season by 0.4 mmt to a record 1.27 mmt, which doubled the reserves on August 1 to 500 thousand mt. The main volumes of sunflower oil were delivered to Turkey from Ukraine.

The EU ban on Ukrainian sunflower imports may be lifted on September 15 due to the concerns of processors, particularly in Bulgaria, facing supply shortages stemming from the bleak sunflower harvest prospects in the EU for the 2023/24 marketing year. Forecasts for sunflower harvests in 2023 have decreased, with Bulgaria down by 17% to 1.7 and 1.8 mmt and Romania down by 11.5% to 2.3 mmt. While sunflower stocks in these countries exceeded the previous year’s by 30% in early Sept-23, they are still insufficient to offset the deficit. Experts estimate sunflower reserves in Bulgaria at between 200 thousand mt and 300 thousand mt, compared to the official estimate of 600 thousand mt and in Romania at 300 thousand mt.

Lastly, the rise in India's edible oil imports was boosted by government increases of 12% in import duty discounts on sunflower and soybean oil. Imports of sunflower oil increased by 11.5% month-on-month (MoM) in Aug-23 to 365 thousand mt, which is the highest figure in seven months.

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