Lang
The effective halt of sunflower oil supplies from Ukraine and Russia through key Black Sea and Azov Sea ports has introduced significant uncertainty into the market, fundamentally altering dynamics within the sector.
According to Svitlana Kyrychok, a vegetable oil market analyst at APK-Inform, this disruption has notably impacted pricing. Russian sunflower oil, which traditionally competed on lower prices, is now trading at a premium compared to its Ukrainian counterpart. For August deliveries, Ukrainian oil is being offered at prices of $1,380–1,400 per tonne FOB, while Russian product is priced higher at $1,400–1,410 per tonne FOB.
Kyrychok predicts that if these maritime logistics issues persist into the autumn, the primary impact will be felt not by the global market, but directly by sunflower producers in Ukraine and Russia. Ukraine is anticipated to achieve a three-year high in sunflower harvest this year, estimated at 13.4 million tonnes. Should maritime logistics not be restored before this new harvest actively enters the market, Ukraine's domestic market risks being overwhelmed by a surplus of raw materials, precisely when opportunities to export the processed oil are limited.
To mitigate these risks, Kyrychok suggests that processing plants will likely delay purchasing sunflower or offer significantly reduced prices. Already, in July and early August, Ukrainian sunflower prices had fallen by UAH 3,000–5,000 per tonne, with bid prices for the upcoming harvest quoted as much as UAH 10,000 per tonne below current actual purchase prices. A similar scenario could unfold in Russia, where a record harvest estimated at over 20 million tonnes would also face restricted export avenues.
Preliminary assessments indicate that western border crossings (rail and road) and Danube ports such as Izmail and Reni could potentially facilitate oil exports of 350–500 thousand tonnes per month under optimal conditions. However, combined sunflower oil exports from Ukraine and Russia for August are projected to total no more than 350 thousand tonnes, a significant drop from 579 thousand tonnes recorded in July.
Kyrychok concluded that while the Black Sea crisis might not create a global shortage of sunflower oil over the next 1–2 months, the situation is poised to change with the new season. This will, in turn, provide importers with a renewed incentive to accelerate the diversification of their purchasing sources.
Source: AgroPortal.ua