Lang
Russia's sunflower oil market extended its upward trend in the first half of March 2025, continuing a steady rise in prices since the start of the year. Prices are expected to keep climbing through the second half of the month, according to a report by Chem Analyst. The sustained price rise stems from an imbalance between supply and demand, which has been aggravated by higher production costs and inflationary pressures in the domestic market.
In February, the FAO Vegetable Oil Price Index climbed to 156.0 points, up 2.0% from January and 29.1% higher than the same period last year. The increase was driven by a broad-based rise in prices of major vegetable oils, including palm oil, canola oil, soybean oil and sunflower oil. The Russian market was also heavily affected by expectations of lower sunflower seed output in the 2024/25 marketing year, which deepened existing supply constraints. A combination of reduced production and higher operating costs has piled financial pressure on producers, sustaining the upward trend in sunflower oil prices.
As the upward price momentum continued, inflationary pressures in Russia intensified in February, driving up production and distribution costs. Facing higher costs, producers passed them on to consumers, further reinforcing the upward pressure on sunflower oil prices. Meanwhile, policy shifts introduced new dynamics into the market, as the Russian Ministry of Agriculture announced that export duties on sunflower oil would fall by 47.7% per tonne in March. This move is likely to stimulate external demand and keep sunflower oil prices elevated in global markets.
The market anticipates strong demand from both domestic and international buyers, supporting continued growth in trade volumes. Russia's manufacturing PMI also rose in February, reflecting robust industrial activity. This expansion in industrial output is helping to bolster the broader economic outlook and boost market sentiment, with suppliers adjusting their pricing strategies to capitalise on strong demand. Russia also increased its sunflower oil exports during the first half of the 2024/25 marketing year, with India and Turkey as the largest importers. However, India's proposal to raise import duties on vegetable oils has added an element of uncertainty, raising concerns about a potential slowdown in speculative demand.
Despite these challenges, the overall outlook for the sunflower oil market remained positive, with prices continuing to rise in early March. Forecasts suggest this momentum could extend into the second half of the month, particularly as global buyers respond favourably to the cut in export duties. With supply constraints persisting and demand holding steady, Russia's sunflower oil market appears set to maintain its positive trajectory in the near term.
Source: Al Mal Forum