Black Sea sunflower oil prices fell by 15% in two months to a 2.5-year low

Over the past two months, sunflower oil prices in the Black Sea region have fallen by 15% to a 2.5-year low under the pressure of pessimism in vegetable oil markets and the banking crisis.

According to monitoring data from Agricensus, Ukrainian sunflower oil prices fell on all delivery bases and yesterday fell below the $1,000/t level to $990/t for April delivery on a CIF-Turkey basis and $980/t on a CIF-Varna basis, although recently, European buyers could not compete with Turkish ones, as prices were on average 4.5% higher in the latter.

Spot orders for sunflower oil in the ports of Ukraine fell by $125/t to $900/t SRT in two months, which is the lowest level since October 2020.

Analysts believe that Black Sea sunflower oil prices are under pressure from falling soybean oil prices and European rapeseed oil prices. As for future price dynamics, quotations are expected to continue to decline in the near term on the back of significant sunflower oil stocks in China and ample supply from European producers, as well as the removal of export duty in India. In addition, the observance of Ramadan between March 22 and April 21 will also reduce demand. In the long term, prices are expected to recover under the influence of "bullish" factors, such as the recovery of demand from Chinese and Indian buyers, the reduction of the soybean harvest in Argentina due to drought and the development of the palm oil market.

In addition, the decrease in production and export of sunflower oil in Ukraine due to the reduction of sunflower stocks will support oil prices in the future.

In 2022/23, Ukraine exported 2.92 million tons of sunflower oil, which is 13% less than last year's pace. According to forecasts of local analysts, production of sunflower oil will decrease by an average of 7.5% to 4.15-4.5 million tons, and export - by 5-9% to 4.6-4.8 million tons.

In February, the Russian Federation reduced sunflower oil exports by 42% compared to January to 198,000 tons, of which 87,000 tons went to China, which remains the main buyer of Russian oil. In total, in 2022/23, the Russian Federation exported 1.341 million tons of oil, of which 373 thousand tons went to China.

According to the Indian association SEA, in February, compared to January, India reduced the import of sunflower oil by almost three times - from 461.46 thousand tons to 156.63 thousand tons, and soybean oil - by only 3% from 366.63 to 355.84 thousand tons This is due to the delay in deliveries from Ukraine due to the queue of ships heading west to the Black Sea ports and significant reserves of cheap palm oil in the country.

This week, the Turkish agency TMO held a tender for the purchase of sunflower oil, during which it purchased 18,000 tons of oil for delivery from March 22 to April 28, including:

• 6 thousand t at the Bunge company with delivery to the port of Mersin at $1,025/t on an EX-Antrepo basis,
• 6 thousand t at the Aves company with delivery to the port of Mersin at $1,043/t on an EX-Antrepo basis,
• 6,000 t at Prime with delivery to Tekirdag port at $1,026.89/t on a C&F basis.

We will remind that the previous tender for the purchase of oil was canceled due to high prices.