1. Weekly News

Global

USDA Lowers Global Sunflower Oil Production Estimates for 2024/25

The United States Department of Agriculture (USDA)’s Sep-24 report indicated a downward revision in the global sunflower harvest forecast for the 2024/25 season. The new estimate stands at 50.55 million metric tons (mmt), marking a reduction of 1.96 mmt from the Aug-24 forecast. Global sunflower oil production is revised down to 19.82 mmt, a decrease of 764 thousand metric tons (mt) from the previous estimate.

For Ukraine, the 2024/25 sunflower harvest is projected at 12.5 mmt, a decrease of 1 mmt. Sunflower exports are expected to reach 230 thousand mt. Sunflower oil production in Ukraine is forecasted at 5.23 mmt, with 4.83 mmt anticipated for export. Moreover, the country’s sunflower meal production is projected to total 5.02 mmt during this period, with 3.93 mmt set for export.

European Union

EU's Oilseed Imports Increased YoY From Jul-24 to Aug-24

According to the European Commission (EC), the European Union’s (EU) oilseed imports increased from Jul-24 to Aug-24 . In particular, sunflower seed imports rose by 70% year-on-year (YoY) to 85.9 thousand mt during this period, while rapeseed imports grew by over 36% YoY, totaling 1.05 mmt. Soybean imports experienced a more modest increase of 10 thousand mt, reaching 2.62 mmt.

In contrast, EU's vegetable oils from non-EU countries have decreased. Specifically, soybean oil declined by more than threefold to 58.4 thousand mt. Rapeseed oil imports also dropped by over 2.25 times to 54.7 thousand mt. Palm oil imports decreased by nearly 39% YoY to 539.6 thousand mt, and sunflower oil imports fell by over 37% YoY to 339.2 thousand mt.

India

DFPD Asked India’s Edible Oil Makers to Maintain MRO

India’s Department of Food and Public Distribution (DFPD) met with crucial edible oil industry representatives to address the country’s low oil pricing strategies. This meeting follows the government’s decision to increase the Basic Customs Duty on various edible oils, a policy that took effect on September 14, 2024. During the meeting, the DFPD asked the industry to maintain the Maximum Retail Price (MRP) for edible oils until the stocks imported at lower duties are fully depleted. This directive is part of the government’s initiative to ease the burden on consumers by aligning domestic edible oil prices with international market trends.

Russia

Russia's Sunflower Oil Prices Increased Due to Supply Shortage

Sunflower oil prices in Russia are experiencing a sharp increase due to a supply-demand imbalance. Purchase prices have gone up by USD 22/mt to USD 32/mt from W37, ranging between USD 801/mt and USD 826/mt in W38, while the wholesale prices have risen by USD 5.4/mt to USD 32/mt, reaching USD 807/mt to USD 836/mt during this week. This price increase is driven by reduced raw material reserves, uncertain harvest, and unfavorable weather conditions impacting crop yields. Moreover, Ukraine's decreased sunflower cultivation areas and a lower sunflower supply further tighten global supply.

Russia's Vegetable Oil and Oilseeds Exports Surge in 2024

From Jan-24 to Aug-24, Russia's vegetable oil exports increased 10% YoY, reaching 4.99 mmt. The most significant growth was in sunflower oil, which rose by 26% YoY to 3.77 mmt, accounting for 75% of the country's total vegetable oil exports. Soybean oil exports grew by 18% YoY to 503 thousand mt. In addition, rapeseed oil exports totaled 705 thousand mt.

Russia's oilseed exports during the same period amounted to 1.93 mmt, including 186 thousand mt of sunflower seeds, 584 thousand mt of soybeans, and 640 thousand mt of flaxseed. Notably, 85% of Russia's sunflower seed exports went to the Eurasian Economic Union (EAEU) countries.

2. Weekly Pricing

Weekly Sunflower Oil Pricing Top Producers (USD/kg)

Yearly Change in Sunflower Oil Pricing Top Producers (W38 2023 to W38 2024)

Russia

In W38, Russia’s sunflower oil prices rose slightly to USD 0.94 per kilogram (kg), marking an increase of 1.08% both week-on-week (WoW) and month-on-month (MoM). The YoY price increased 30.56% from USD 0.72/kg in W38 2023. This upward price trend is driven by a significant supply-demand imbalance from reduced raw material reserves and uncertain harvest conditions due to unfavorable weather. The ongoing decrease in Ukraine’s sunflower cultivation areas has compounded these challenges, further tightening the overall sunflower supply in the global market.

Ukraine

In W38, sunflower oil prices in Ukraine remained steady at USD 0.95/kg, reflecting no WoW or MoM changes. The YoY prices show an increase of 31.94% compared to USD 0.72/kg in W38 2023. Despite this weekly price stability, Ukraine’s sunflower oil sector faces supply constraints due to decreased sunflower seed inventory. Moreover, due to climate challenges, the USDA lowered Ukraine’s sunflower production for the 24/25 season in its Sep-24 report, which will further support the price.

Argentina

In W38, sunflower oil prices in Argentina increased to USD 0.95/kg, reflecting a 1.06% WoW and MoM rise. The price rise is mainly due to global production challenges arising from heat and drought conditions, which have negatively impacted production forecasts across several regions, including the Black Sea area and the EU. The USDA has revised its global sunflower oil production estimate for the 2024/25 season downward by 764 thousand mt to 19.82 mmt, further supporting the upward price trend. However, competition from rival oils will also influence sunflower oil pricing in the market.

3. Actionable Recommendations

Enhance Production Resilience

With the USDA lowering Ukraine’s sunflower production estimates and the continued impact of climate challenges, Ukrainian farmers and agricultural stakeholders must adopt adaptive farming practices. This includes diversifying crop rotations to improve soil health and resilience against climate variability and investing in irrigation systems to mitigate the effects of drought. Moreover, establishing a robust forecasting system for weather patterns can help farmers make informed decisions regarding planting and harvesting schedules.

Monitor Production Trends

Sunflower farmers and agribusinesses should closely monitor the evolving production forecasts for sunflower oil and seeds, particularly in light of the USDA’s downward revision for the 2024/25 season. By staying informed about weather patterns and market reports, stakeholders can adjust their planting and harvesting strategies to mitigate risks associated with reduced yields and supply constraints, including diversifying crops to hedge against fluctuations in sunflower production.

Develop Dynamic Pricing Strategy

With sunflower oil prices rising due to supply-demand imbalances, Russian producers should develop dynamic pricing strategies. This can involve implementing a tiered pricing model based on market trends, ensuring that prices remain competitive while reflecting increased costs due to reduced raw material reserves.

Sources: AgroPortal.ua, Sino, AgroInvestor, Specagro, Theprint