W38: Sunflower Update

In W38 in the sunflower oil landscape, on September 15, the European Union (EU) lifted its ban on wheat, barley, rapeseed, and sunflower seed exports from Ukraine to several Eastern European countries, which had been in place since May 2. Ukraine agreed to strengthen export controls as a condition for this lifting. However, on the same day, Poland, Hungary, and Slovakia independently imposed bans on importing Ukrainian agricultural products, including wheat, rapeseed, sunflower, and more. Poland even extended the ban on groats and flour to protect their domestic farmers from the influx of cheap Ukrainian produce, which had led to falling prices. On September 18, Ukraine requested consultations with Slovakia, Poland, and Hungary under the World Trade Organization (WTO) framework regarding the bans on its agricultural product imports.

Following Poland, Hungary, Slovakia, and Romania, Bulgarian authorities are prepared to restrict the import of Ukrainian sunflowers due to ongoing protests of Bulgarian agricultural producers. They also plan to hold negotiations with Ukraine regarding bans on the export of other products. While the quality of Ukrainian products meets European standards, any violations will halt non-compliant goods, with compensation provided to the producers. Furthermore, Ukrainian sunflower seed import is promised to resume under a quota agreement with Ukraine.

Sunflower prices in Ukraine are expected to increase following the opening of the Bulgarian market. Bulgaria recently offered prices between USD 410 and 420 per metric ton (mt), excluding VAT. This corresponds to approximately USD 320 to 340/mt after accounting for logistics costs. In contrast, Ukrainian domestic processing companies offered lower prices, from USD 311.15 to 324.68/mt with delivery, making foreign markets more appealing.

Ukraine anticipates a 7% year-on-year (YoY) increase in sunflower harvest in 2023, reaching 13.4 million metric tons (mmt). However, with a sharp 98% decline in carry-over stocks, the processing is expected to decrease by about 11% to 12.4 mmt in the current agricultural season. Meanwhile, in the previous season (2022/23), Ukraine processed 13.9 mmt of sunflower, a 20% increase from the 2021/22 season, attributed to record carry-over stocks of 3.5 mmt at the season's start.

In the 2023/24 season (September–August), Russia is projected to produce approximately 7 mmt of sunflower oil, which could lead to exports of 4.2 to 4.4 mmt. Meanwhile, the United States Department of Agriculture (USDA) anticipates Russia's sunflower seed harvest for the same season will reach 17.5 mmt, excluding Crimea and new regions.

Lastly, India has become the second-largest importer of vegetable oils from Russia. In the 2022/23 season, India's imports of Russian sunflower oil doubled compared to the previous season, reaching 683 thousand mt.

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