W45: Sunflower Update

Published Nov 18, 2023
W45: Sunflower Update

In W45 in the sunflower oil landscape, the forecast for the global sunflower harvest in the 2023/24 marketing year (MY) was increased by 560 thousand metric tons (mt) to 57 million metric tons (mmt). In particular, the production estimate for Ukraine was increased by 500 thousand mt to 14.5 mmt. Estimates of sunflower processing and exports in 2023/24 MY for key countries remained almost unchanged.

In the initial two months of the current agricultural season, which began on September 1, Ukrainian sunflower oil exports have decreased by 20% compared to the same period in the previous season, totaling 764 thousand mt. Although Oct-23 saw a monthly increase to 407 thousand mt, it represents a 47 thousand mt annual decline. Sunflower seed exports faced more significant challenges, with only 30 thousand mt shipped in Oct-23, showcasing improvement from previous months but remaining notably lower than the prior season's performance. The competition among processors and Ukrainian farmers' reluctance to sell at low prices are identified as factors impacting profit margins and limiting the export of sunflower crops.

According to a Nov-23 report from the United States Department of Agriculture (USDA), the forecast for sunflower production in Ukraine for the 2023/24 MY has been increased by 500 thousand mt to 14.5 mmt. This projection is notably higher than the 12.2 mmt produced in the previous season. With improving production prospects, analysts also raised the forecast for Ukrainian oilseed reserves in the current season to 595 thousand mt, compared to the Oct-23 estimate of 275 thousand mt, though still lower than the 815 thousand mt from the 2022/23 MY. Furthermore, the forecast for sunflower processing in Ukraine remains at 14 mmt, consistent with the estimate from the previous month and the result of 2022/23 MY. Consequently, the forecast for sunflower oil production remains unchanged at 6.02 mmt.

In 2023, Russia is expected to reduce its imports of sunflower seeds by 19.5%, to 20.1 thousand mt, compared to 25 thousand mt in 2022. This decline is attributed to growing domestic production replacing the need for imports. Turkey and the United States (US) remain among the main suppliers, while imports from Europe are decreasing.

Meanwhile, the estimate for the sunflower harvest in Turkey for the 2023/24 agricultural season is projected to be 1.35 mmt, down from 1.86 mmt in the 2022/23 season. The significant decrease in the sunflower crop in Turkey, caused by intense heat and drought, raises questions about whether the Turkish government will maintain high tariffs on sunflower and sunflower oil imports, as planned. The current season's high import duties, coupled with substantial sunflower stocks (390 thousand mt compared to 40 thousand mt at the beginning of the last season) have limited sunflower oil imports in Turkey. Only 56 thousand mt of sunflower and 203 thousand mt of sunflower oil have been imported since the beginning of the current season, compared to 324 thousand mt and 471 thousand mt from Jul-22 and Sept-22, respectively.

Lastly, in the 2022/23 MY, the production of unrefined sunflower oil in Kazakhstan reached 417.6 thousand mt, marking a substantial 50% increase compared to the previous season. Additionally, the production of refined sunflower oil also saw growth, reaching 145.3 thousand mt. This increase is attributed to the implementation of an export duty on sunflower seeds, which became effective on February 4, 2023. As a result of these measures, sunflower oil prices have decreased, with the average selling price from oil factories in Kazakhstan currently ranging from USD 0.97 to 1.19/liter.

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