1. Weekly News

European Union

Sunflower Oil Prices Surge Amid Reduced Production Forecasts and Low Stocks, Hitting One-Year High in Rotterdam

Rainfall in parts of the Black Sea region and Western Europe is forecasted for the upcoming weeks, but its impact on crops remains uncertain. Sunflower oil prices rise in European and Black Sea ports, driven by reduced production forecasts and low stocks. Last week, Rotterdam sunflower oil prices reached over USD 1,100 per metric ton (mt) free-on-board (FOB), a one-year high. The European Commission (EC) Monitoring Agricultural Services (MARS) has lowered average yields for sunflower and canola in Bulgaria. Oil World has reduced its global sunflower production forecast by 1.5 million metric tons (mmt). Moldova's sunflower oil exports have decreased by 16.6% from the previous season. Market reactions indicate that high sunflower oil prices will likely persist, supported by reduced production forecasts and inelastic demand in the European Union (EU), which may bolster seed prices.

Russia

Russia Maintains Zero Export Duty on Sunflower Oil for Aug-24

In Aug-24, Russia will maintain a zero export duty on sunflower oil, unchanged from the previous month, following the introduction of a zero duty in Jun-23, the first such reduction since Feb-23. Conversely, the export duty on sunflower meals will increase to USD 21.87/mt (RUB 1,869.7/mt), up from USD 10.54/kg (RUB 901.3) in Jul-24. The duty on sunflower oil is based on an indicative price of USD 798.3/mt, compared to USD 773.3/mt the previous month, while the duty on sunflower meal is calculated from an indicative price of USD 211.2, up from USD 198.6. The floating export duty on sunflower oil, previously set at 70%, was extended until August 31, 2024.

Ukraine

Ukraine Expands Oil Crop Areas Amidst Reduced Maize Yields and Stress on Sunflower Crops Due to Extreme Heat

In Ukraine's 2024 agricultural season, producers expanded the area sown with oil crops such as sunflower, rapeseed, and soybeans while reducing corn cultivation due to unfavorable weather conditions. Scorching heat in Eastern Europe and the Black Sea region has adversely affected maize yields, with a projected 20 to 30% reduction in harvest compared to expectations. Sunflower crops are under stress, particularly in Mykolaiv Oblast, while conditions remain relatively normal in Zhytomyr, Vinnytsia, and Khmelnytskyi Oblasts. High temperatures are affecting sunflower growth, with plants struggling in extreme heat.

Moldova

Moldova's Sunflower Seed Exports Double in 2023/24 Season, While Processed Oil and Meal Exports Declined

In the 2023/24 agricultural season, Moldova exported 504.50 thousand mt of sunflower seeds, doubling the previous season's figures. However, the export volume of processed sunflower oil decreased by 17% to 191.70 thousand mt, and sunflower meal exports fell by 13%. Moldova's economy benefits more from exporting processed products with higher added value. Despite the challenges, maintaining access to alternative raw material sources is crucial for sustaining production and preventing economic disruptions. In the first half of 2024, Moldova's sunflower oil exports decreased by 45% to 68.30 thousand mt, and meal exports nearly halved to 59.90 thousand mt compared to last year.

Montenegro

Montenegro Government Caps Prices on Essential Products, Including Sunflower Oil, Amid Economic Pressures

In W30, the Government of Montenegro approved a temporary measure to cap prices for essential products, including sunflower oil. Due to ongoing external economic pressures and rising costs of essential food items, the decision sets maximum margins at 5% for wholesale and 7% for wheat flour, sugar, sunflower oil, and table salt retail prices. This measure, developed in collaboration with the Chamber of Commerce, aims to protect low-income consumers while supporting the economic activity of retailers.

2. Weekly Pricing

Weekly Sunflower Oil Pricing Top Producers (USD/kg)

Yearly Change in Sunflower Oil Pricing Top Producers (W30 2023 to W30 2024)

Russia

On Aug-24, Russia will continue its zero export duty on sunflower oil, which was introduced on Jun-23, forecasted to stabilize domestic sunflower oil prices by encouraging exports. The indicative price for sunflower oil is USD 798.3/mt, slightly higher than Jul-24, potentially leading to minor price adjustments in the domestic market. The extension of the zero-duty policy aims to support the sunflower oil industry amidst fluctuating global market conditions.

Ukraine

Sunflower oil in Ukraine stood at USD 0.93 per kilogram (kg) in W30, remaining unchanged since W27 and decreasing 6.06% year-on-year (YoY) from USD 0.99/kg in W30 2023. In the 2024/25 season, Ukraine's grain exports have increased by 67% to nearly 2.78 mmt as of July 24, up from 1.67 mmt a year ago. Despite this increase, the agriculture ministry estimates a decrease in the nation's grain and oilseed crops to 77 mmt for 2024. With combined grain and oilseed exports projected to remain steady at 60 mmt, the tight supply situation will likely sustain high sunflower oil prices, impacting global markets by maintaining upward pressure on prices due to reduced availability from one of the world's leading suppliers.

Argentina

Argentina's sunflower oil slightly decreased to USD 0.95/kg in W30, marking a 1.04% week-on-week (WoW) drop. As of W30, Argentina accounts for 7% of global exports, with two-thirds of its sunflower production destined for foreign markets. The Buenos Aires Grains Exchange (BAGE) projects the sunflower area for the 2024/25 season to remain stable at 1.85 million hectares (ha), though climate concerns, particularly in northern regions, may affect planting levels. With the ongoing war between Ukraine and Russia, global sunflower oil production is disrupted, presenting opportunities for Argentine producers. Strong international demand, especially from India, supports this positive outlook. However, export duties and economic policies continue to challenge the sector. Sunflower oil prices in Argentina are forecasted to rise, influenced by global supply disruptions and local production dynamics.

3. Actionable Recommendations

Enhance Production Efficiency and Supply Chain Resilience

Given the fluctuations in sunflower oil prices and reduced production forecasts, stakeholders should invest in advanced processing technologies and optimize their supply chains. For example, adopting improved extraction methods and strengthening logistical operations will enhance production efficiency and ensure consistent supply. This approach will be essential for countries experiencing production stress, such as Ukraine and Moldova.

Diversify and Strengthen Export Markets

Sunflower oil producers, particularly in Argentina, should focus on diversifying their export markets to mitigate the impact of global supply disruptions. Target high-demand regions such as India and the EU while exploring emerging markets in Southeast Asia (e.g., Vietnam and Indonesia) and North America (e.g., the United States). Enhancing trade relationships and leveraging platforms like Tridge will aid in capturing new opportunities and stabilizing export volumes.

Advocate for Supportive Trade Policies

Industry advocates should engage with policymakers to support trade policies that stabilize the sunflower oil market. This includes lobbying for extending zero export duties on sunflower oil in Russia and pushing for reduced tariffs or export incentives in other key producing countries. Supportive trade policies will help maintain competitive pricing and support industry stability amidst global market fluctuations.

Sources: Tridge, CDM, Agropolit, Kvedomosti, Agroportal, UkrAgroConsult, Forbes