Sunflower oil market dynamics: Egypt's tender signals shift amid abundant global supply
Mintec has learned from industry sources that Egypt's government agency, the General Authority for Supply Commodities (GASC), has recently concluded a tender, resulting in the purchase of 63,000 metric tonnes of sunflower oil. This significant transaction involved the participation of five key players in the market, with all volumes acquired at $880 per metric tonne on a Cost and Freight basis, scheduled for delivery in December. This purchase starkly contrasts the previous GASC tender held on 16th August, when Egypt secured 36,000 metric tonnes of sunflower oil but at a higher price of $990 per metric tonne.
The noteworthy discount of $110 per metric tonne in this recent tender reflects the shifting dynamics in the market, driven by the anticipation of robust sunflower seed harvests in Ukraine and Russia in the coming months. Mintec has received estimates indicating Ukrainian production at 14.5 to 15.5 million metric tonnes and Russian production ranging from 17 to 18 million metric tonnes. If these projections hold, it signals an ample supply of sunflower seeds and oil, contributing to an overall surplus in the market.
Turning our attention to the EU's crop outlook, market players initially maintained their production forecast at 10 million metric tonnes, surpassing the previous season's 9 million metric tonnes. However, concerns have emerged regarding the potential need for downward revisions. Insights gathered by Mintec from industry insiders highlight lower yields in the sunflower harvest in Romania and Bulgaria. Such production declines could exert upward pressure on sunflower seed and oil prices, although the presence of ample supplies in the EU and the global market may mitigate the extent of these price increases, as suggested by market players.
The ramifications of Egypt's recent tender outcome extend far and wide, offering clues about an ongoing rebalancing of the vegetable oil market. This shift comes in the wake of the initial disruption caused by the Ukraine conflict and underscores the dynamic nature of the industry.
