Purchase prices for sunflower are increasing against the background of increased demand for oil

The increase in the export of sunflower oil and meal through the Black Sea ports led to an increase in the purchase prices of sunflower in Ukraine. But on the world market, strong competition for Ukrainian oil is Russian oil, which over the past few years has occupied the traditional markets of China and India for Ukraine.

During the week, demand prices for sunflower rose by 500-800 hryvnias/t to 14,500-15,000 hryvnias/t with delivery to the factory, but producers are restraining sales in anticipation of further price increases. Export demand for Ukrainian sunflower remains low due to the ban on deliveries to neighboring EU countries, but demand prices for DAP - Bulgaria have increased to $420-430/t.

But against the backdrop of increased supply and lower soybean oil quotations in Chicago, sunflower oil prices stopped rising this week and even fell by $10-20/t to $770-780/t. Global demand prices for sunflower oil with delivery to customers remain at $900/t due to increasing exports of Russian oil to India and China.

In October, compared to September, Ukraine increased the export of sunflower oil by 50,000 tons to 407,000 tons (454,000 tons in October 2022), and sunflower meal by 28% to 359,000 tons, which is 2% less than in October 2022. Moreover, the export of meal to China thanks to the Black Sea corridor increased by 2.4 times compared to September to 144 thousand tons, which is the maximum of the last 7 months.

China will significantly increase sunflower oil imports in 2023, however, the supply volume in the domestic market is quite high, and the demand is weak. In October, the import of first-pressed sunflower oil grew by 25.6% compared to September to a 3-year high of 92.5 thousand tons (equivalent to $88 million), which is 66% higher than in October 2022. Of them, 71.8 % or 66.4 thousand tons were delivered from the Russian Federation, 21.8% or 20.1 thousand tons - from Ukraine, and 6.4% or 6 thousand tons - from Kazakhstan. For 10 months of 2023, the import of sunflower oil to the People's Republic of China amounted to 1.33 million tons, which is 280% higher than last year's figure, when exports from Ukrainian ports were blocked.

Spot sunflower oil prices in China's domestic market remain stable at RMB 8,250-8,400/t, or $1,150-1,170/t, and may decline amid increased supply and weak demand.

In 10 months of this year, compared to the same period in 2022, India increased its sunflower oil import by 2.4 times to 731,000 tons, which will limit the supply of Ukrainian oil to this market.

Falling oil prices amid worsening macroeconomic indicators in the US and China will add pressure on vegetable oil prices in the near future, especially given the seasonal increase in sunflower and palm oil supplies.