W47: Weekly Sunflower Update
Europe
Since W45, European Oilseed and Vegetable Oil Prices Have Been Falling
The decline in oil prices over the past two weeks has had an impact on the price of vegetable oils and oilseeds amid a worldwide economic downturn and sluggish demand in China due to new outbreaks of the coronavirus infection. Since W45, the price of crude sunflower oil on the Rotterdam market dropped by an average of roughly USD 100 to USD 1,310-1,315/MT. However, the sustainability of this trend is in doubt given the difficulties faced by Ukrainian manufacturers, where some factories are compelled to halt production. According to Ukrainian commercial sources, the price of Ukrainian sunflower oil for delivery to Bulgaria in W46 stayed at USD 1240–1250/MT DAP.
Ukraine
Ukraine exported 79,000MT of sunflower seeds for USD 39.2M over the year of 2021. 2022 shipments had reached 1,754,000MT for USD 893.5 million in just 9 months. Additionally, sunflower seed share in the overall export structure climbed from 0.06% in 2021 to 2.70% for 9 months in 2022.
Sunflower seed export batches carried by road vehicles to overseas markets as of November 22 totaled 96,400MT, up from 42,800MT for the same time in October. Additionally, the reported volume represented nearly 33% of all sunflower seed exports from Ukraine for the first 22 days of November. The highest amounts of sunflower seeds were transported by road in November in the direction of Romania (37,300MT) and Hungary (30,100MT)
In Ukraine, sunflower prices are rising in response to a rise in the export of processed goods and seeds. Processing companies are being forced to increase purchases and hike pricing due to the resurgence of ships into Black Sea ports and the speed of sunflower exports. Ukraine's exports of sunflower oil rose by 9% to 175,500 MT in W47, but its export of seeds fell by 6.5% to 94,800 MT. Sunflower oil exports totaled 1.36 MMT in the 2022–2023 MR, while sunflower seed exports came to 770,700MT. As a result of the rise in export prices, the purchase price of sunflower climbed in W47 to USD 410–435/MT with delivery to the factory, but it may soon decline once more due to a drop in the price of sunflower oil and seeds for export. Under pressure from declining oil and palm oil prices by 9-11%, sunflower export prices for DAP delivery to Romania, Hungary, and Bulgaria increased from USD 550–570/MT in W45 to USD 580–600/MT in W46. However, starting on Monday of W47, they decreased again to USD 550–560/MT DAP.
Ukrainian Sunflower Oil Prices Rose to a 6-Month High
In W46, the price of sunflower oil reached its highest level in six months. The increase is mainly due to the soybean oil market, a delay in the sunflower harvest, and a possible decrease in the harvest in Russia, as well as predictions of a decrease in processing in Ukraine, where oil refineries are closing down due to infrastructure damage. Ukrainian sunflower oil prices remain at USD 1,240–1,250/MT DAP for delivery to Bulgarian ports, while Russian oil offer prices have increased to USD 1,250–1,300/MT FOB.
Ukraine Is Finishing Harvesting Sunflowers, but Corn Has Been Threshed on Only 50% Of the Area
As of November 18, 81% of the total 16.79M hectares of major agricultural crops had been harvested in Ukraine. In 2021, a record 106MMT of grain, leguminous, and oil crops were harvested in Ukraine, including 22.6MMT of oil crops and 84MMT of grain and leguminous crops. As of November 18, with a yield of 2.17MT/ha, 9.8MMT million tonnes of sunflower were threshed from 4.5M hectares, or 96% of the area, to finish the oil crop harvest.
Russia
The Harvest of the Main Oilseeds in the Russian Federation Is Already 24MMT
As of November 24, Russian farmers had already harvested about 24MMT of major oilseeds including sunflower, soybean, rapeseed, for the 2022 season, which is about 0.7MMT more than the same period in 2021. Up until W47, sunflower was harvested from 7.3M hectares, yielding 13.3MMT of oilseeds at a yield of 1.81/MT per hectare.
Zero Duty on Export of Sunflower Oil From Russia to Remain in December
Just like in November and October, there will be no tax on sunflower oil exported from Russia in December, as stated by the Ministry of Agriculture. The duty on oil is calculated on the basis of the indicative price of USD 1,178/MT compared to USD 1,319.1/MT a month earlier. Earlier, there was a floating export duty of 70% introduced for sunflower oil from September 1, 2021, to August 31, 2023.
In Russia, crops such as sunflower, corn, and sugar beet are, as a rule, sown with imported hybrids. Under the sanctions, buying these seeds is quite challenging. Although farmers are trying to replace imported items, doing so can lead to lower crops. 10% of the need is currently in the Altai region, according to an examination of the importation of seeds to the Altai Territory. Although cultivated on Russian Federation soil, these seeds are an imported selection. A reduction is likely; however, if there are no advanced imported technologies, the region will be covered with domestic seeds.
Sunflower Oil and Margarine Continue to Fall in Price in Russia
Consumer prices for margarine and sunflower oil in Russia fell from November 15 to November 21, 2022. As a result, the cost of sunflower oil in the Russian Federation dropped by 0.4% in W46 as opposed to 0.8% the week before. In October, the price of sunflowers decreased by 1.7% MoM, whereas in September it dropped 0.1% MoM and in August it declined almost as much as 1.5% MoM.
The 2022 Harvesting Campaign Concludes in the Russian Region of Ryazan
The harvesting campaign for 2022 is generally complete for all crops in the Ryazan region of Russia except for late crops such as sunflower seeds and corn that are still being harvested by farmers. As of W47, a total of 100,000MT of sunflower seeds were harvested from 53% of the area.
Russia Needs to Think About New Markets for Vegetable Oil Exports
Due to a significant decrease in demand in China and other importing nations expected in the next 10 years, Russia will need to find new markets for its vegetable oil. Exports should be concentrated in India, the Middle East, North Africa, and Tropical Africa, where population growth is expected to be significant. However, these states' interests are mostly concentrated on whole foods rather than heavily processed goods. According to the Ministry of Agriculture, at the end of October, in the first nine months of 2022, there was a 29% rise in the supply of vegetable oils to international markets. Largest share in sales was occupied by sunflower oil with 68% of the total volume. According to Russian Prime Minister, Russia could become the main exporter of sunflower oil in 2022.
Kazakhstan
Kazakhstan Is Increasing Production and Export of Vegetable Oils For 2022/23
Under the effect of the sunflower oil segment and export shipments to China, Kazakhstan's production and export of vegetable oils in 2022/23 (Oct-Sept) will rise in comparison to previous seasons. It should be highlighted that Kazakhstan processed substantial amounts of oilseeds imported from Russia in 2021/22 (October–September). Sunflower seed processing in Kazakhstan increased by 40%, to 820,000–840,000 MT. As a result, the Republic of Kazakhstan's exports of sunflower oil in 2021/22 (Oct–Sept) increased to a record-setting 200,000MT. Tajikistan, China, and Uzbekistan are Kazakhstan's top export markets.
From January-September 2022, Kazakhstan's imports of sunflower oil increased by 3.3 times compared to the same period in 2021, to USD 274.5M while sunflower seed exports increased by 88% YoY to 105.8M.
It Is More Profitable for Kazakhstan to Export Oil and Meal to Uzbekistan Than Raw Materials
In the 2021/22 season, total exports of sunflower oil and meal from Kazakhstan to Uzbekistan were 21% higher than sales of sunflower seeds in their pure form. The average export cost of sunflower seed, sunflower oil, and sunflower meal from Kazakhstan to Uzbekistan was USD 545/MT, USD 1416/MT and USD 233/MT respectively. Additionally, in the 2021/22 season, Uzbekistan imported more than 82,000MT of sunflower seeds, 70,000MT of sunflower oil, and 86,000MT of sunflower meal and cake from Kazakhstan, and the total imports for all these three items amounted to USD 164M. According to the Ministry of Trade of Kazakhstan, the country loses 30% of its profit when supplying sunflower seeds instead of high-value-added products to the international market.
Bulgaria
In Bulgaria, More Than 2 Million Tons of Sunflower Are Ripening in the Warehouses
Since May, 713,000MT of sunflower oil have been imported into Bulgaria, when the EC established corridors of solidarity with Ukraine and when the customs tax on Ukrainian exports decreased. The bad news is that native and Ukrainian goods are readily available in Bulgarian warehouses, totaling more than 2MMT. There are currently no sunflower exports, which is making the situation worse as it is admitted that there will be a movement in the market soon.
Argentina
Sunflower Planting in Argentina Already Covers 93.4% Of the Projected 2M Ha
As of W47, sunflower has been sown for 93.4% of the total 2M ha forecasted for the 2022/23 campaign in Argentina, with 89.4% of crops reported to be in a normal-excellent state. The sowing has been mainly encouraged by the improvement in the humidity of the fields in the southern agricultural area.
