Sunflower prices in Ukraine fall on forecasts of further decline in oil prices
Sunflower prices in Ukraine have fallen sharply due to reduced demand from processors, who expect a further drop in prices and demand for vegetable oils, given the attacks on civilian ships and tankers in the Black Sea, which led to an increase in freight rates for transportation.
Demand prices for sunflower oil in Ukraine (with delivery to ports in December) fell by $10/t to $1,220/t during the week against the backdrop of increasing supply and decreasing demand, as well as a drop in prices for Russian sunflower oil by $10-15/t to $1,190-1,195/t FOB (with delivery in December).
Drone attacks on civilian ships transporting sunflower oil from the Russian Federation and Ukraine shocked the market, as civilian ships had hardly been targeted since the beginning of the war.
Purchase prices for sunflower decreased by 500-1000 UAH/t per week to 28,000-28,600 UAH/t or $580-593/t excluding VAT (for 50% oil content) with delivery to the plant, in particular due to constant air raids and increased shelling of the Odessa region, which led to a three-day power outage.
Factories have basically built up sunflower stocks for two to three months of operation, but if sunflower oil prices continue to decline, the processing margin will become negative again.
The weather in Ukraine in December did not allow the completion of the sunflower harvest, so part of the crop was lost. According to operational data, 9.064 million tons of sunflower have been harvested from 93% of the areas so far, with a yield of 1.88 tons/hectare.
Additionally, sunflower prices will be pressured by the decline in world prices for feed grains and meal. Demand prices for sunflower meal in Ukraine did not change during the week and amounted to $210-215/t with delivery to ports.
Falling oil prices are putting pressure on palm oil prices, which will reduce demand for sunflower oil from Ukraine and the Russian Federation, especially against the backdrop of increased risks for ships in the Black Sea.
