Sunflower prices in Ukraine continue to rise amid rising prices for oil and vegetable oils

Sunflower prices in Ukraine resumed growth last week amid the devaluation of the hryvnia and a significant increase in the price of soybean oil due to a decrease in the production forecast in the US, which supported sunflower oil quotes on the world market.

During the week, processors increased prices for sunflower with 50% oil content by 300-500 UAH/t to 24,500-25,200 UAH/t with delivery to the factory, but farmers continue to hold back on sales.

After an unexpected decrease in the USDA's January report of the US soybean production forecast by 2.58 million tons, March soybean futures on the Chicago Board of Trade rose by 5% to $385.8/ton in two sessions, and soybean oil futures rose by 7.5% to $1,012/ton (+9.5% per month).

According to Trading Economics, the average price of sunflower oil delivered to buyers after the USDA report increased by 4% to $1,305/t (+1.8% per month).

On the Bursa exchange in Malaysia, March palm oil futures rose 4.8% in two sessions to 4,504 ringgit/t or $999/t, although analysts had expected a larger increase amid a significant reduction in production and inventories in December, especially given the rise in the price of crude oil and soybean oil.

March Brent crude futures rose 5.2% in two sessions to a 4-month high of $81/barrel (+10% for the month) after the tightening of US sanctions on oil and the Russian shadow fleet.

Rising prices for the cheapest soybean oil on the world market and rising prices for palm oil will contribute to an increase in the premium for sunflower oil. Therefore, in the near future, prices for Ukrainian sunflower oil with delivery to Black Sea ports may return to the December level of $1,100/t. However, they remain under pressure from forecasts of increased sunflower production in the Russian Federation.

In the January report, USDA experts increased the forecast for world sunflower production in the 2024/25 MY by 0.18 to 50.69 (56.03) million tons, in particular for the Russian Federation - by 0.25 to 16.55 (17.1) million tons. The forecast for world sunflower oil production was increased by 0.09 to 20.05 (22.14) million tons, in particular for the Russian Federation - by 0.1 to 6.71 (6.82) million tons, and the export forecast was increased by 0.13 to 12.43 (15.04) million tons, in particular for the Russian Federation - by 0.1 to 4.17 (4.4) million tons. At the same time, the estimate of ending stocks was left at 2.25 (2.95) million tons.