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Ukrainian sunflower oil price bullish in October on tight supply

October 16, 2020

1 mins read

The Ukrainian sunflower oil price trended higher in October, with the crude (ex-works) price reaching EUR 914/MT on 9th October, up 5% since the start of the month. Lower production year-on-year (y-o-y) due to adverse weather has had a bullish impact, with prices now 19% above the 5-year average price.

In October, the United States Department of Agriculture (USDA) lowered its estimate for the 2020/21 (Sep-Aug) sunflower oil production by 12% to 6.4 million tonnes. The drop was attributed to a lower sunflower seed production forecast, which the USDA also revised down by 2 million tonnes to 15 million tonnes. Recent drought in the Black Sea region has drastically reduced prospects of a bumper crop in 2020/21.

However, other industry estimates suggest the fall in production may be even greater. Speakers at the Ukrainian Fat & Oil Industry conference pegged production at 13 million tonnes, citing how the drought has heavily impacted soil moisture. Other oilseed distributors have pegged it even lower at 11 million tonnes.

The fall in supply comes amid robust Asian demand. According to Ukrainian government statistics, sunflower oil exports for 2019/20 marketing year (Sep-Aug) rose 10% y-o-y to 6.7 million tonnes, and Chinese imports totaled 770,000 tonnes, up 16% y-o-y. In addition, Indian imports rose to 1.3 million tonnes over the same period, up 25% y-o-y, with India becoming the top importer of Ukrainian origin sunflower oil.

Some reports in the Indian press have noted an ongoing change in consumer habits. Sunflower oil has become an Indian consumer presence compared to alternative vegetable oils, due to its health and environmental benefits. Strong exports suggest that Ukraine is making inroads into the Indian market, at the expense of rival oils such as palm oil.

 

Topics: Oils & Oilseeds
Robert Mann

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