W14 Sunflower Oil Update: Sunflower Oil Imports Surge Boosts India's Edible Oil Market, Concerns Over Price Increases in South Africa

Published Apr 11, 2024

In W14 in the sunflower oil landscape, India experienced a significant surge in sunflower oil imports in Mar-24, rising by 51% MoM and reaching the second-highest level on record. Lower prices incentivized refiners to favor sunflower oil over palm oil, resulting in a 3.3% decline in palm oil imports during the same period. This increase in sunflower oil imports is forecasted to alleviate sunflower oil inventories in the Black Sea region, driven by production issues and steady palm oil prices. Concurrently, sunflower planting campaigns have commenced in Black Sea countries like Ukraine, Russia, and Türkiye, marking the beginning of the new season and indicating a projected 4.5% YoY increase in the sunflower cultivation area. Lastly, South Africa's Competition Commission flagged potential "opportunistic" price increases in sunflower oil, with processor prices soaring by 72% in 2022 despite stable seed prices, raising concerns about unjustified price hikes.

Sunflower Oil Import Surge Boosts India's Edible Oil Market

India's sunflower oil imports surged by 51% month-on-month (MoM) in Mar-24, reaching the second-highest level on record. This import increase was attributed to lower prices, prompting refiners to opt for sunflower oil over rival palm oil. Consequently, palm oil imports experienced a decline of 3.3% during the same period. The rise in sunflower oil imports is forecasted to help reduce sunflower oil inventories in the Black Sea region. Experts noted that production issues and firm palm oil prices are driving buyers to switch to sunflower oil. Despite palm oil traditionally trading at a discount to soy oil and sunflower oil, falling stocks have led to price increases, making sunflower oil imports more competitive. The trend of higher sunflower oil and soy oil imports contributed to India's total edible oil imports in Mar-24 reaching the highest level in six months, totaling 1.149 million metric tons (mmt). This surge is significant for global vegetable oil markets, particularly in countries like India that play a crucial role in demand dynamics.

Start of Sunflower Planting Campaigns Started in Black Sea Countries in W14

During W14, sunflower planting campaigns have commenced in Black Sea countries such as Ukraine, Russia, and Türkiye, signaling the beginning of the new season and offering initial insights into the upcoming sunflower seed harvest in the region. A projected increase of 4.5% year-on-year (YoY) in the sunflower cultivation area is anticipated.

Concerns Raised Over Sunflower Oil Price Increases in South Africa

The South African Competition Commission has flagged potential "opportunistic" price increases in sunflower oil, as outlined in its recent essential food pricing report. Despite stable sunflower seed prices, sunflower oil processor prices surged by 72% YoY in 2022, significantly exceeding retail price increases of 36%. This discrepancy suggests that retailers absorbed part of the cost hike. The Commission raised concerns about a high concentration along the sunflower oil value chain, posing a risk of unjustified price increases during periods of inflation. While some cost increases, such as energy and fuel, may have influenced processor prices, the substantial margin expansion raises suspicion of opportunistic pricing behaviors detached from actual costs.