Sunflower oil: return to pre-war prices
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Sunflower oil prices returned to pre-war levels. And this despite the sharp decline in the harvest in Ukraine.
As expected, sunflower production in Ukraine is significantly below last year. Estimates put it at 10 million tonnes by the time the harvest is coming to an end, while the country produced more than 17 million tonnes last season. This drop could theoretically have a major impact on the market, as Ukraine alone accounts for half of global sunflower oil exports.
Inventories compensate for the lower harvest
But because of the war that has affected trade in the Black Sea, the stocks, which are usually almost non-existent at the end of the campaign, are high this year, on the contrary: they would be over 4.5 million tons and should make it possible to largely compensate for the decline in production.
We better understand that prices have not skyrocketed as there will be seeds for export. A tonne of oil was listed at $1,300 in Rotterdam this week versus more than $2,000 after the war. The other factor explaining this sharp decline is demand. The inflationary context and anti-Covid policies of China, a major importer of sunflower oil, are weighing on purchases. And even if demand in Europe is expected to be greater than usual due to a drought-hit crop, prices reflect a less tight market than a few months ago.
Ukraine exported more unprocessed seeds
” The market has adjusted, as has demand, some of which has shifted to other oils explains Nathan Cordier, Head of Market Analysis at Agritel.
The industry is also forced to adapt. Many Ukrainian crushers have been shut down. As a result, Ukraine sold less meal and less oil this year, but exported seven times more unprocessed sunflower seeds, according to a US Department of Agriculture report. These seeds, crushed in the countries of arrival, will inevitably increase the bill for manufacturers given the energy costs of running the factories, especially in Europe.
► Also read: War in Ukraine: Sunflower oil rationed in several European countries