EU Sunflower Oil Prices Decline Yet Demand Emerges
The Mintec Benchmark Prices [MBP] for Sunflower Oil FOB Northwest Europe (6 ports option) [Mintec Code: SFOR] was assessed $1,009.50/mt down $10.50/mt on the week but importantly a much lower decline than in prior weeks, as fears around the closure of the grain corridor led to some snap buying and an increase in offers over the week. Mintec learned that on 11th April the grain corridor was suspended due to the lack of inspections by Russia on the same day, although shipping did resume on 12th April. Yet, similar issues occurred on both 17th and 18th April, again stoking concerns that the grain corridor deal may exist in name only. As reported last week, should the grain corridor deal end or slow down, supply of sunflower seed and oil to the Eurozone could begin to drain as buyers look to cover open positions, although it is still currently high.
A Black Sea trader commented to Mintec, “the checks that are being undertaken by the Russians are nothing short of ridiculous. Spelling mistakes and even a lack of capitalisation on names is enough for them to not allow it through. Even if they don’t find any discrepancy, they put the wrong ship names down. Obviously, this is causing massive issues and there are serious concerns which I share about the grain corridor being at its logical end. Prices are likely to move up as we could see a rush of buying in case anything does happen.
Increasing bullish sentiment is the ongoing issue with Ukraine exports ‘flooding’ EU markets such as Poland, Bulgaria, Lithuania, Hungary and Slovakia. The so-called ‘flood of imports’ led Poland, Slovakia, Hungary and Bulgaria to ban the importation of grains and oilseeds, with Bulgaria rumoured to be considering a similar action. Although at the time of writing the situation with Poland seems to be resolved, again allowing Ukrainian grain and oilseeds to flow into the country, it is important to note that these moves led to uncertainty over the prospect of Ukrainian goods being allowed into the European market over longer term. Although it is unlikely these actions will last, as individual states of the bloc are not legally allowed to decide trade policy, players are still concerned that a bloated balance sheet brings consumption and supply far closer if the flow of goods stops. Thus, Mintec heard that some market players are attempting to buy required volumes not only of sunflower seed and oil, but also rapeseed and oil. “Sellers are aware that some concern is entering the market and they are putting prices up to reflect this. If players want to buy, then they need to pay the ‘fear’ premium that’s currently being factored in.”
A separate trader commented, “sunflower oil is still a very needed commodity. I think some are forgetting the fact there is still a war ongoing in one of the key exporters of sunflower oil and rapeseed. Prices have been too cheap for a long time, and I think all the downward pressure that was going to be exerted on the market has come already and the bottom has been well and truly passed.”
