W12 Sunflower Update: Global Sunflower Oil Market Price Rise 5% MoM, Russia's Exports Surged 30% YoY in First Two Months of 2024

Published Mar 30, 2024

In W12 in the sunflower oil landscape, global vegetable oil markets have witnessed a bullish trend, driven by reduced palm and canola oil production, leading to increased interest in alternatives like sunflower and soybean oil. Prices have surged in Mar-24, particularly for sunflower oil, with forecasts indicating a potential production deficit and subsequent price hikes for oilseeds and their derivatives. In Ukraine, sunflower oil prices reached record highs in W12, reflecting global market trends. Meanwhile, declining oilseed stocks in Russia and increased exports have contributed to market dynamics. Kazakhstan saw a significant increase in sunflower oil exports in 2023, with the government emphasizing export duties to support the local processing industry and reduce dependence on raw material exports, leading to notable production and export growth.

Global Vegetable Oil Markets Witnessed Bullish Trend Amid Production Reductions

Global vegetable oil markets experienced a bullish trend due to reduced production of palm and canola oil during W12, prompting interest in alternatives like sunflower and soybean oil. Prices have risen in Mar-24, particularly with tightening palm oil supplies in Indonesia, Malaysia, and India. Sunflower oil prices increased by almost 5% month-on-month (MoM) since the beginning of Feb-24, with similar trends seen in India and the Black Sea region. Moreover, forecasts indicate reduced processing of sunflower seeds and canola, coupled with anticipated growth in demand for edible oils and biofuels. A potential production deficit in oils between Jan-24 and Sept-24 is expected to drive price increases for oilseeds and their derivative products.

Record High Prices for Ukrainian Sunflower Oil in W12

Demand prices for Ukrainian sunflower oil in ports reached a record high since the beginning of the 2023/24 agricultural year. Prices ranged from USD 780 to 795 per metric ton (mt) on Carriage Paid To (CPT), marking an increase of USD 30/mt to USD 38/mt compared to the W11. Analysts attributed this surge to a similar trend observed in the global vegetable oils market. Deliveries of the product abroad increased by 9% week-on-week (WoW), reaching 156 thousand mt, despite the rising prices.

Russia's Oilseed Stocks Dropped 20% YoY in Feb-24

The remaining oilseeds stocks in Russia witnessed a 20% year-on-year (YoY) decrease in Feb-24, or by 1.1 million metric tons (mmt), to 4 mmt. Specifically, sunflower seed stocks decreased by 16.8% YoY, reaching 2 mmt. This decline is due to increased processing for oil production and feed components. Additionally, these products were actively exported abroad. For instance, according to the Oil and Fat Union of Russia, sunflower oil exports from Russia surged by almost 30% in Jan-24 and Feb-24 compared to last year, exceeding 850 thousand mt.

Kazakhstan's Sunflower Oil Exports Surged in 2023, Driven by Growing Demand

Kazakhstan exported 364.4 thousand mt of sunflower oil to foreign markets in 2023, marking a 1.6-fold increase compared to 2022. In terms of value, these exports amounted to USD 321.1 million. The primary importers included Tajikistan, Uzbekistan, Afghanistan, and China. Of the total exports, unrefined oil accounted for 316.2 thousand mt (87%), while refined oil comprised 48.2 thousand mt (13%). Kazakhstan boasts over 60 sunflower processing facilities with a combined capacity of 3 mmt per year. Despite a gross harvest of 1.2 mmt of sunflower seeds in 2023, processing plants operated at only 40% of their capacity.

Kazakhstan's Prime Minister Supported Sunflower Export Duty

The Prime Minister of Kazakhstan underscored the export duty on sunflowers as a form of support for the local industry rather than a restrictive measure. He emphasized that removing this duty could jeopardize markets for local processors and perpetuate the country's dependence on raw material exports. Notable achievements resulting from this policy include a significant increase in sunflower oil production, rising from 331.1 thousand mt in 2022 to 534.1 thousand mt in 2023, and a robust 60% YoY growth in exports, covering both refined and unrefined forms. Furthermore, sunflower oil imports declined by 17% YoY in 2023, totaling 89.1 thousand mt.