Shipping disruptions and regional tensions threaten Sunflower oil market

January 19, 2024

3 mins read

In the latest assessment of Sunflower oil prices (Mintec Code: SFOR), the market witnessed a price decline over the week, yet industry dynamics unveiled interest among players to secure the commodity, albeit at slightly reduced levels as compared to last week. Traders attributed this trend to what they deemed 'enticing prices' and a growing urgency to replenish diminishing stocks.

The challenges in the Suez region continue to cause issues within the market. Recent reports of ship attacks by Houthi rebels, using advanced drones and missiles, have prompted shipping companies to explore alternative routes. With the primary redirection through the Cape of Good Hope, these detours significantly lengthen delivery times compared to the direct Suez route. Market insiders disclosed to Mintec that these disruptions notably affected European and Black Sea shipments, stretching shipping times by at least three weeks, and, in some cases, up to five weeks due to congestion.

Traders in India are grappling with delays in sunflower oil shipments, particularly from Russia. Purchases scheduled for January are now expected to dock as late as March. The disruptions have led Indian traders to increase bid levels for sunflower oil by approximately $20/mt compared to the previous week, as they strive to secure cargoes amid mounting uncertainties.

Additionally, Indian traders foresee that, if delays persist, the market could witness heightened upward price pressure. Mintec observed increased demand compared to last week from Black Sea players, with both buyers and sellers adjusting prices in response to the urgency to cover open positions, particularly on the spot market. However, unlike last week, demand is less certain from Turkish players, with some traders willing to continue to purchase volumes “if the price is right” an industry player commented, whilst other market players expressed their hesitancy to Mintec around seeking any additional volumes until existing stock is depleted.

A trader shared insights with Mintec, remarking, "The sunflower oil market presents a dual scenario; heightened demand from the EU and the Black Sea, but lacklustre international demand. While there's potential for a $20/mt to $30/mt price surge in the next couple of weeks, realising further gains hinges on all sides of the market showcasing elevated levels of demand, which is presently uncertain."

As shipping disruptions persist and market players navigate these challenges, the sunflower oil market remains at a crossroads, delicately balancing regional demand variations and international uncertainties.

Further insights can be explored on Mintec Analytics, where you’ll find real-time price tracking, expert commentary, and customized alerts. Book a demo today to unlock the actionable intelligence you need to stay ahead of the curve.

Kyle Holland
Kyle Holland

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