Lack of Grain Corridor Clarity Continues to Overshadow the Sunflower Oil Market

March 17, 2023

3 mins read

Lack of Grain Corridor Clarity Continues to Overshadow the Sunflower Oil Market


The Mintec Benchmark Prices [MBP] for Sunflower Oil FOB Northwest Europe (6 ports option) [Mintec Code: SFOR] was assessed at $1,054.50/mt on 16 March down $70.00/mt on the week due to low demand from a European perspective and continued high supplies within the EU. Unlike previous weeks, international players have pulled back from the market so far this week. This pullback is in part due to the continued uncertainty over the grain corridor deal and whether it will be extended. 

Mintec has heard several plans for the potential continuation of the grain corridor deal but at the time of writing on 17 March no deal has yet been agreed or put into place. One potential solution could see the corridor extended for 60 days rather than the 120 days of the prior extension, signed in November 2022. However, a 60-day extension would mean that booking forward shipments would be near impossible, as booking vessels to enter Ukraine and acquire materials is currently more than a 60-day turnaround. Also, crushers may struggle to get material to crush within these time frames, with the likely result being that more seed would need to be exported to adhere to these strict timelines. Thus, market players commented to Mintec that a 60-day extension would be “akin to having a deal in name only, as no major deals could take place.” A separate plan that is being championed by Turkey would see the corridor extended by 120 days, which would allow “normal service to resume,” a trader commented to Mintec.

A separate trader commented to Mintec, “there is far too much uncertainty. No one has any idea at this point what is going to happen. The safest thing to do is to sit and wait, which is what we and the majority of traders are doing. There probably will be a deal struck, but depending on the terms, the status quo could resume, or we could be looking at an entirely different market.”

Turning to spring planting intentions, Mintec has calculated that grain prices at the current levels hold near zero margins for farmers after having purchased the necessary materials, such as seeds and fertiliser. Contrary to thoughts last week, this may mean that far more sunflower seed is planted in April and May than was expected, as margins for oilseeds are currently still positive for farmers. According to Mintec calculations, if the proposed planting levels that farmers are suggesting go ahead, 13-14 million metric tonnes of sunflower seed may be produced from Ukraine come harvest in November and December. Yet, due to the reduced size of the 2022/23 crop, this year’s carry is expected to be very low if realized. Although production may be bolstered. There may be similar levels of supply to this year when production was 10.6 million metric tonnes, but carry was 3- 4 million metric tonnes meaning that tightness in the vegetable oil complex may be seen in H2 potentially increasing prices from the current levels.

A Black Sea trader commented, “it looks like there may be more sunflower seed planted which could ease some of the supply concerns in the market. Having said that, I am still not convinced that we end up with huge supply”

Kyle Holland
Kyle Holland

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