Black Sea oilseeds: surging prices – where is the psychological limit?
Sergey Feofilov, UkrAgroConsult webinar of April 22, 2021
The rise in global sunflower oil prices up to USD 1700/MT FOB was unexpected by key market operators. The upward trend is explained by sunflower crop shrinking both in Ukraine and around the world, low carry over, and growing demand from China.
Sunflower oil importers quite predictable switched to cheaper alternative vegetable oils. Ukrainian oil exports to the EU countries and India were damaged the most.
With major buyers moving to other vegoils, sunoil prices fell from USD 1720/MT to USD 1520/MT (-USD 200/MT).
Sunoil is the basic vegetable oil in diet of Ukrainian citizens. Domestic wholesale and retail sunoil prices followed the export values with some time lag but anyway domestic consumers are not happy with 50-60% higher price tags for bottled refined sunoil on market shelves. Producers of food with sunoil as the major ingredient (like mayonnaise or margarine) also joined this upward trend.
All that caused a research how to curb sunoil price growing and the simplest answer was to limit exports. But even rumors about possible restrictions propped sunoil export prices up by US$ 50-55 immediately.
Finally, a memorandum between Ukrainian Gov’t and sunoil producers association was signed without any export restrictions but setting 2020/21 export limit of 5380 KMT. The limit might be increased next summer after proper consideration and talks between the Gov’t and the crushers’ association to escape from mounting ending stocks of sunseed and/or sunflower oil.
UkrAgroConsult expects considerable expansion of sunflower area not only in Ukraine but in other Black Sea countries and highly likely sunoil production will go up impressively in the coming 2021/22 season.
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