W7 Sunflower Update: EU Sunflower Seed Imports Plummet 78% YoY From Jul-23 to Feb-24, while Ukraine Sunflower Processing Dips in Jan-24

Published Feb 23, 2024

In W7 in the sunflower oil landscape, EU countries experienced a substantial 78% YoY decline in sunflower seed imports in the first half of the 2023/24 MY, primarily attributed to a sharp reduction in exports of Ukrainian sunseed. Conversely, imports from Moldova surged by nearly 52%. A major sunflower producer, Ukraine saw a slight decrease in processing volume in Jan-24 compared to Dec-23, yet remained significantly higher YoY. Traditional holiday slowdowns, logistical challenges, and geopolitical tensions influenced this decline. Meanwhile, requests for Ukrainian sunflower transport to Bulgaria have emerged, offering potential opportunities for producers amidst stable freight rates. In Russia, sunflower prices rose, driven by heightened demand from oil extraction plants. Similarly, Argentine oil extraction plants experienced a minor decline in processing volume in Dec-23, though total processing for the year reached a record high, signaling resilience in the face of market challenges.

EU Sunflower Seed Imports Plummet 78% YoY, Ukrainian Exports Hit Hard

From Jul-23 to Feb-24, European Union (EU) countries imported only 391.2 thousand metric tons (mt) of sunflower seeds, marking a drastic 78% year-on-year (YoY) decline, according to a report by European Commission (EC) analysts. This decline is primarily due to a significant drop in exports of Ukrainian sunseed, plummeting from 1.56 million metric tons (mmt) to 115 thousand mt. However, imports of oilseeds from Moldova increased by nearly 52% YoY, rising from 140 thousand mt to over 212.1 thousand mt. Furthermore, the EU received small batches from China (24.7 thousand mt as compared to 21.9 thousand mt from Jul-22 to Feb-23), Turkey (17.3 thousand mt as compared to 21 thousand mt), and the United States (6.2 thousand mt as compared to 8 thousand mt). Overall, the EC estimates that during the specified period, the bloc reduced its import of oilseeds by 23% to just over 10.6 mmt.

Ukraine Sunflower Processing Dips in Jan-24, Yet Remains 36% Higher YoY

Ukraine sunflower processing slightly decreased in Jan-24 compared to Dec-23, dropping by 10% month-on-month (MoM) to approximately 1.4 mmt. However, this figure remains 36% YoY higher. The reduction in processing during this month can be due to several factors, including traditional New Year holidays in importing countries, a slight slowdown in sunflower oil exports due to difficulties with shipment caused by weather conditions in the Black Sea in early Jan-24, and an escalation of the conflict in the Red Sea. Notably, processing in Ukraine has exceeded the previous season's figures for the third consecutive month. From September to January of the 2023/24 marketing year (MY), processing of this oilseed increased to 6.5 mmt, marking a 9% YoY increase. Despite the high pace of sunflower oil exports expected in Feb-24, the future pace of sunflower processing may be constrained by factors such as vegetable oil prices, complex export logistics, and low demand from India.

Ukraine Expects Stable Spring Crop Area for 2024

According to Ukraine's Minister of Agrarian Policy, Ukraine anticipates the sown area in spring 2024 to remain similar to last year, with a possible slight decrease in a worst-case scenario. Ukrainian farmers planted 12.75 million hectares (ha) of spring crops for the 2023 harvest, including 5.3 million ha of sunflowers.

Ukrainian Sunflower Export Opportunities to Bulgaria Drive Transport Demand

Requests for Ukrainian sunflower transport to Bulgaria have emerged on the road transportation market. Freight rates for this route range from USD 70.37 to 97.43 (EUR 65 to 90), depending on the type of transport and route. With the reduced export duty to Europe at 1.8%, sunflower sales to Bulgaria could serve as a viable alternative for Ukrainian producers compared to the domestic market. Overall, freight rates for road transport to Europe have remained stable compared to the previous week, as noted by brokers. Meanwhile, in the domestic transportation market in Ukraine, rates have also remained unchanged compared to W6. The significant decrease in rail transport rates has created a competitive balance between road and rail transport within the domestic market.

Russian Sunflower Prices Surged Amid Increased Factory Activity

Russian sunflower prices rose in most regions in W7, with oil extraction plants aiming to accelerate raw material supply. Prices in the South reached USD 258.81 per metric ton (mt) (RUB 24,165/mt), the Center at (RUB 24,836/mt), down by USD 0.95/mt, and the Volga region at USD 249.33/mt (RUB 23,280/mt), up by USD 4.25/mt. The rise in prices comes after a period of relatively low levels observed since the beginning of Feb-24. This surge is due to heightened activity at oil factories seeking to expedite raw material flow. However, market players suggest that this upward trend may not be sustained, especially with the imminent start of the sowing campaign.

Argentine Sunflower Seed Processing Hits Decade High in 2023

Argentine oil extraction plants processed approximately 218 thousand tons of sunflower seeds in Dec-23, a decrease of about 6% YoY. However, despite the decline in Dec-23, the total volume of processing for 2023 reached a record high for the last decade, estimated at 3.9 million tons, according to the Chamber of the Oil Industry of the Argentine Republic (CIARA) and Cereal Export Center (CEC).