Sunflower prices in Ukraine remain high amid rising prices for other oilseeds

Lower forecasts for the soybean harvest in South America due to the December drought led to a rise in the price of soybean oil, as well as an increase in prices for palm oil, which supported the quotes of Ukrainian sunflower oil. However, further increases in prices for domestic sunflower oil limit low demand from buyers, some of whom are starting to buy sunflower oil from competitors – Russia and Argentina, fearing the cancellation of supplies in the event of a Russian military invasion of Ukraine.

Purchase prices for sunflower seeds in Ukraine since the beginning of January against the background of a sharp devaluation of the hryvnia by 5% increased to 19700-22500 UAH/ton (685-785 ПДВ/ton with VAT) at the oilseed plant 48-50%. At the same time, prices for sunflower oil after falling to F 1340-1360/ton FOB returned to the level of 1 1370-1380/ton FOB.

According to Bloomberg, India may increase imports of sunflower oil from Argentina and Russia in order to avoid possible disruption of oil supplies from Ukraine in the event of aggression. Almost 80% of sunflower oil imported to India is produced from Ukraine and Russia. In my 2020/21, India purchased 1.89 million tons of crude oil, of which 74% was supplied by Ukraine, and 12% each by Argentina and Russia. Currently, India has contracted 60 thousand tons of oil from Russia and Argentina for delivery in February – March 2022.

In the event of an escalation of the conflict between Ukraine and Russia, prices for sunflower oil will rise sharply, which will lead to an increase in the price of other vegetable oils.

March palm oil futures on the Malaysian stock exchange rose 6% to 5,329 ringgit/ton or.1,271/ton over the past 10 days amid a reduction in production in the country and restrictions on exports of crude palm oil from Indonesia.

March soybean oil futures on the Chicago Stock Exchange rose 3% from Monday to.1,407/ton, adding 12% of the price for the month.

Vegetable oil markets are also supported by an increase in oil prices to the highest level since 2014 of 9 90/barrel. However, prices may soon fall amid reduced tensions between Ukraine and Russia and falling demand from the world's largest oil importer, China, which will hold the Olympics from February 4 to 20 after the week – long New Year's weekend.