In W43 in the sunflower oil landscape, an influx of low-cost sunflower oil from Russia and Ukraine is observed, causing a decline in palm oil prices as these producers take advantage of currency depreciation to expand their market presence. Currently, crude sunflower oil is priced at USD 895 per metric ton (mt), including insurance and freight, while crude palm oil is available at USD 850/mt. This is a significant shift from a year ago, when the price difference between sunflower oil and palm oil was over USD 400/mt, compared to the current USD 45/mt difference.
This trend is attributed to Russian farmers achieving a record sunflower crop of over 17 million metric tons (mmt) and actively selling their produce. This increased processing is expected to boost sunflower oil exports, reaching 4.5 mmt in 2023, up from 3.7 mmt in the previous year. Despite a recent decline in dollar prices, Russian farmers still enjoy favorable returns due to the significant depreciation of the ruble, which has lost over 38% of its value against the US dollar this year. Additionally, Ukraine, which faced challenges in supplying sunflower oil after Russia's withdrawal from the Black Sea grain deal, is aggressively selling sunflower seeds.
For the 2023/24 marketing year (MY), Ukrainian sunflower oil production is expected to decrease by 8% to 5.5 mmt compared to the previous year due to reduced deliveries through seaports, resulting in a corresponding 10% drop in exports to 5.1 mmt. However, considering the favorable outlook for the 2023 sunflower harvest and the challenges in accurately estimating production in frontline regions, there's potential for a slightly larger harvest than current forecasts, similar to the previous year. It's important to note that oil production and export figures will largely depend on the functionality of alternative export routes, especially the operation of ports.
As of October 20, Russian farmers have harvested 24 mmt of oilseeds, marking a 1.5-fold increase compared to the same date in 2022. This includes an impressive 1.8-fold increase in sunflower harvesting, reaching 14.1 mmt. Sunflower oil production from Jan-23 to Aug-23 has grown by 13.8% year-on-year (YoY), exceeding 4.5 mmt. The total oilseed harvest for 2023 is expected to reach 27.5 mmt, with a record sunflower harvest projected at 16.98 mmt.
In Sept-23, production of Russia's unrefined sunflower oil and its fractions reached 405 thousand mt, marking a substantial 26.6% YoY increase, but a decline of 19.6% month-on-month (MoM). Moreover, from Jan-23 to Sept-23, 4.9 mmt of unrefined sunflower oil and its fractions were produced, representing a 14.8% YoY increase. Furthermore, refined sunflower oil production reached 200 thousand mt, 4.7% less YoY and 15.7% less MoM.
Iran has banned the import of soybean and sunflower oils starting on October 23 to regulate the edible oil market. This move is expected to boost the supply of sunflower oil on the global market and potentially lead to lower prices. In the current season (Sept-22 to Jul-23), Russia supplied 404 thousand mt of sunflower oil to Iran, marking a 70% increase YoY.