1. Weekly News

Russia

Russia's Strong Performance in Vegetable Oil Exports in Q1-2024

In Q1-2024, Russia achieved a new record by exporting 578.3 thousand metric tons (mt) of edible vegetable oils (sunflower, rapeseed, and soybean) to China, marking an 18.2% year-on-year (YoY) increase. This strengthened Russia's position as a leading supplier in the market, with its share accounting for 58.4% of China's total edible vegetable oils imports. Besides China, Russia also increased its vegetable oil exports to India, Turkey, Egypt, and Algeria, leading to a 20% YoY increase in total vegetable oil shipments in this period.

Additionally, Russia's Oil-and-Fat Union forecasts that Russia's vegetable oil exports will surpass 3.8 million metric tons (mmt) by the end of the first half of 2024, and domestic oil plant capacity will increase by over 6% YoY to 33 mmt. Sunflower oil will continue to be the top choice.

Record Sunflower Oil Production Expected in Russia for 2023/24 Season

Sunflower oil production in Russia is projected to reach a record of 7.55 mmt in the 2023/24 season, a 13.5% YoY increase from the previous season. This increase is expected to boost Russian sunflower oil exports to 4.59 mmt, marking a 14.3% YoY rise from the 2022/23 season.

Argentina

Argentina Expects Lower Sunflower Oil Stocks for the 2024/25 season

Argentina is forecasted to have lower sunflower oil stocks for the 2024/25 season due to decreased prices and expected production drop. This drop is expected to lead to a substantial 46% YoY reduction in economic receipts. According to forecasts from the United States Department of Agriculture (USDA) Foreign Agricultural Service (FAS), Argentina's vegetable oil inventory is projected to reach 224 thousand mt in the 2024/25 season, down from 265 thousand mt in 2023/24 and 282 thousand mt in 2022/23. Sunflower oil production is expected to decline to 1.5 mmt from 1.63 mmt in the previous year. Similarly, export volumes are anticipated to decrease by 15% YoY to 850 thousand mt.

Ukrain

Increased Sunflower Oil Exports in Ukraine

Ukraine has shifted its focus to the European market for sunflower oil after losing its main market, China due to the war. Russia has now taken over the lost market. According to the Ukroliyaprom Association, the largest fat-and-oil entities in Ukraine, Ukraine exported 4.4 mmt of sunflower oil in the 2023/24 season, up 17.9% from the previous season. Ukraine's priority is to address the ongoing war and then work towards reclaiming its former customers.

Rising Prices for Sunflower Oil in Ukrainian Ports

According to analysts at APK-Inform, an information and analytical agency, sunflower oil prices in Ukrainian ports have risen for the third consecutive week. This uptick is attributed to a parallel price trend in the global oil market and an increase in weekly shipments. As of May 21, prices have reached USD 840/mt, marking a significant increase of USD 25 to 30/mt compared to the beginning of May-24.

2.Weekly Pricing

Weekly Sunflower Oil Pricing Top Producers (USD/kg)

Yearly Change in Sunflower Oil Pricing Top Producers (W21 2023 to W21 2024)

Russia

The sunflower oil prices in Russia decreased by 1.15% week-on-week (WoW), reaching USD 0.84 per kilogram (kg) in W21. However, based on a monthly and yearly comparison, the prices increased by 2.44% month-on-month (MoM) and 1.20% YoY, respectively. Despite the price fluctuation in Russia, sunflower oil prices remained strong in the global market, due to increased trading activities and expected low production in Argentina and Ukraine.

Ukraine

In W21, Ukraine's sunflower oil prices increased by 1.19% WoW to USD 0.88/kg due to increased sunflower seed prices and strong export prices. This increase marked the third consecutive weekly increase despite lower demand from India and stable palm oil prices. According to agriculture commodity trading company GrainTrade, sunflower seed prices in Ukraine have increased by USD 12.5 to 17.5/mt this week due to a shortage of offers.

Argentina

The sunflower oil prices in Argentina increased to USD 0.93/kg, marking a significant 5.56% WoW rise in W21. Strong global export prices and low inventory and production forecasts drive this price increase. According to the USDA, Argentina's vegetable oil inventory is projected to decline by 15.47% YoY to 224 thousand mt in the 2024/25 season, and the sunflower oil production is expected to decrease by 7.98% YoY to 1.5 mmt.

3. Actionable Recommendations

Diversification of Export Markets

Ukraine should continue diversifying its sunflower oil export markets to reduce dependency on any single market. While targeting the European market, exploring new markets in Asia, Africa, and Latin America can help mitigate risks associated with geopolitical tensions or market disruptions. Strengthening trade partnerships with emerging economies and implementing market development strategies tailored to each region can expand Ukraine's market reach and enhance its global sunflower oil market competitiveness

Investment in Infrastructure and Logistics

Argentina needs to prioritize investment in infrastructure and logistics to improve efficiency and reduce costs along the sunflower oil supply chain. Upgrading port facilities, enhancing transportation networks, and modernizing storage and handling facilities can streamline the movement of sunflower oil from production areas to export destinations. By addressing infrastructure bottlenecks and improving supply chain resilience, Argentina can optimize its export capabilities, maintain market competitiveness, and meet global market demand for sunflower oil.

Sustainable Practices and Certification

All sunflower oil-producing countries should prioritize sustainable farming practices and pursue certification schemes to demonstrate their commitment to environmental stewardship and social responsibility. Implementing sustainable agricultural practices, such as crop rotation, integrated pest management, and soil conservation techniques, can minimize environmental impact and preserve biodiversity. Seeking certifications such as Fair Trade, Rainforest Alliance, or Organic can enhance market access, attract environmentally conscious consumers, and differentiate sunflower oil products globally.