W28: Sunflower Update

In W28 in the sunflower oil landscape, the global output of vegetable oils is expected to reach a record level in the 2023/24 crop year. However, in the same period, sunflower oil production may decline by around 10 thousand metric tons (mt) to 20.8 million metric tons (mmt). This news comes after sunflower seed supply was initially expected to exceed 2022's volume due to an increase in planted areas. The European Commission has raised its estimate for the European Union sunflower seed production in the 2023/24 season by 225 thousand mt to 10.8 mmt, which is 9 mmt higher than last year and represents an increase of about 17.1% compared to the five-year averages. Meanwhile, global vegetable oil prices in June decreased by 2.4% MoM, reaching their lowest value since Nov-20. This decline is attributed to lower world prices for palm and sunflower oils, driven by abundant global supply.

Sunflower prices in Ukraine have been highly volatile in the current season, influenced primarily by factors such as meal and oil exports through Black Sea ports. Sunflower oil prices increased significantly, going from USD 750/mt to USD 900/mt for delivery to buyers. Subsequently, processors raised their purchase prices for sunflowers from USD 379.06-392.60 to USD 419.67-433.21/mt with delivery to the factory. However, the production will be lower than expected due to low and unstable prices, which led producers to allocate more planting areas to soybeans instead of sunflowers. Sunflower oil production in Jun-23 reached a record low of 88 thousand mt, a 21% month-on-month (MoM) drop, as several sunflower processing plants were shut down in response to the decrease in sunflower oil prices in April and May. Despite this, sunflower oil remained a top export for Ukraine, with 131 countries importing it. The main destinations for sunflower oil exports include Turkey (19.3%), Romania (12.1%), China (11.9%), Poland, and India (7.2%).

According to the United States Department of Agriculture (USDA) forecast, Russia is expected to produce 16.5 mmt of sunflower in the 2023/24 season, up from 16.25 mmt in the previous season. Sunflower oil will reach 6.36 mmt, while its exports are expected at 4.1 mm. Sunflower oil production in Russia is forecast to be 6.36 mmt, with an export volume of 4.1 mmt. In Bulgaria, sunflower yield is projected to reach 2.4 mt/hectare (ha) in the 2023/24 season, leading to a gross harvest increase of 5% to 2.2 mmt compared to the 2022/23 season. Despite the decline in sunflower prices since March, many farmers still prefer to plant it due to its resilience in handling possible summer droughts and lower production costs. Additionally, Bulgaria's import of sunflower oil (refined and unrefined) increased significantly by 3516% in 2022 to 218 thousand mt. Bulgaria mainly imports sunflower and its products from Ukraine, Romania, and Moldova.

Lastly, in Adana, Turkey, the region experienced a harvest of 240 thousand mt in 2023 from around 75 ha of sunflowers planted, benefiting from favorable spring rains. However, due to the zero customs duties on sunflower seeds and crude sunflower oil until May 31, 2023, industrialists opted to import supplies, leading to surplus stock in all products, adding with the low demand for sunflowers.