1. Weekly News

Ukraine

Ukraine's Sunflower Oil Exports Witnessed a 17% YoY Surge in MY 2023/24

Ukraine witnessed a 17% year-over-year (YoY) surge in its sunflower oil exports in the 2023/24 season (September to April), with a total export volume of over 4.4 million metric tons (mmt). This is the second-highest in history, with the highest being 4.49 mmt in MY 2019/20. The increase in demand can be attributed to attractive prices compared to other vegetable oils, and increased sunflower processing in Ukraine.

Ukraine's Sunflower Oil Exports Expected to Reach 5.6 mmt in MY 2024/25

APK-Inform, an agribusiness consulting agency in the Commonwealth of Independent States (CIS) countries has updated its projection for Ukraine's sunflower oil exports in 2024/25 to 5.6 mmt, showing a 4% increase from the previous estimate. Nevertheless, the country will likely experience a decline in sunflower processing in the upcoming months due to depleting domestic stocks. As a result, there might be a decrease in the monthly exports of the finished products.

Kazakhstan

Kazakhstan Agrees to Export USD 12 Million Worth of Sunflower Oil, Flour, and Other Grain Products to Afghanistan

According to the Trade Policy Development Center (Qaz Trade), Kazakhstan agreed to supply sunflower oil, flour, and other grain products to Afghanistan worth more than USD 12 million. This followed the results of last year's visit of the Afghan delegation to Astana, the parties set themselves the task of bringing mutual trade to $3 billion in the near future. However, in 2023, the trade volume decreased and amounted to USD 636.5 million.

Russia

Russia Expected to Set New Record in Sunflower Oil Production in MY 2023/24

According to the general director of the ProZerno analytical center, Russia’s sunflower oil production is expected to increase by 13.5% YoY to a new record of 7.55 mmt in MY 2023/24. In addition, Russian sunflower oil exports in the current season could reach 4.59 mmt, which is 14.3% higher than 4.02 mmt in the 2022/23 marketing year (MY).

2. Weekly Pricing

Weekly Sunflower Oil Pricing Top Producers (USD/kg)

Yearly Change in Sunflower Oil Pricing Top Producers (W18 2023 to W18 2024)

Russia

Sunflower oil prices decreased to USD 0.82 per kilogram (kg) in Russia, marking a 1.20% week-on-week (WoW) decrease Various factors, including the suspension of the Russia-Ukraine commodity deal, drove the decrease, disrupting sunflower oil shipments. Furthermore, Russia’s suspension of theBlack Sea Grain Initiative impacted global grain markets and food security. Analysts anticipate temporary market disruptions but highlight ongoing food insecurity globally.

Ukraine

In W18, Ukraine's sunflower oil prices remained unchanged for the second week at USD 0.84/kg. Furthermore, Ukrainian crushes reported considering switching to processing rapeseed in the new harvest due to possible sunflower shortages, which are currently at their lowest levels in the past three seasons.

Argentina

Sunflower oil prices in Argentina experienced a slight decrease to USD 0.85/kg, marking a 1.16% WoW drop amidst ongoing inflation challenges and affordability concerns of essential goods, part of a broader trend of price hikes in basic commodities. The sunflower oil industry faced challenges in the 2023/24 MY, with production declining due to drought and adverse weather conditions. This led to a significant reduction in planted area and harvest compared to the previous campaign. Despite lower production, sunflower seed exports are projected, with a substantial portion of oil production destined for export. However, the decline in sunflower oil production and price are forecasted to impact the Argentine economy, reducing tax revenues and gross production value.

3. OtherOutstanding Price Anomalies

Sunflower Oil Prices in China Dropped by 26.58% YoY Due to Supply Surplus

The wholesale price of refined sunflower oil in Xinjiang, China, decreased by 26.58% YoY in W18, reaching USD 2.07/kg. The price has remained stable since Oct-23 after a significant drop from USD 2.27/kg on September 4, 2023 to USD 2.05/kg on September 25, 2023.

The price decrease of sunflower oil in China is mainly due to the global supply surplus, particularly from Russia and Ukraine, which are the leading players in sunflower oil production and trade. In the 2023/24 season, Russia's sunflower oil production is projected to reach a record high of 7.55 mmt, a 13.5% YoY increase. Similarly, Ukraine's exports in the first half of the 2023/24 season have increased by 18.5% YoY, reaching 3.2 mmt. This surge in supply led to lower prices worldwide.

China produces around 2.5 mmt of sunflower seed annually. However, the output is primarily to satisfy the use in food applications (mainly for snacks) instead of for edible oils. Therefore, the country relies heavily on imports to meet local demand. Given the optimistic outlook of the edible oil market, the price is expected to rebound shortly.

4. Actionable Recommendations

Diversify Export Market

With Ukraine and Russia expected to set new records in sunflower oil production, it's crucial for both countries to diversify their export markets. Explore emerging markets in Asia, Africa, and Latin America to reduce dependence on traditional markets and mitigate the impact of geopolitical tensions and trade disruptions. Strengthen trade agreements, partnerships, and market access initiatives to promote sunflower oil exports and increase market share in high-growth regions

Enhance Processing Capacity and Efficiency

Given the anticipated surge in sunflower oil production in Ukraine and Russia, there's a need to enhance processing capacity and efficiency to meet growing domestic and international demand. Invest in modernization, technology upgrades, and automation in sunflower oil extraction, refining, and packaging facilities to improve productivity, quality, and cost-effectiveness. Collaborate with industry stakeholders, research institutions, and technology providers to adopt best practices and innovative solutions for optimizing processing operations and value chain efficiency.

Monitor Supply and Demand Dynamics

Stay vigilant about global supply and demand dynamics, especially in key producing and consuming countries like China, Argentina, and Kazakhstan. Monitor production forecasts, trade policies, weather patterns, and market trends to anticipate potential disruptions, price fluctuations, and demand shifts. Develop risk management strategies, contingency plans, and market intelligence systems to respond promptly to changing market conditions and mitigate risks associated with oversupply, price volatility, and geopolitical uncertainties.