Decrease in sunseed production in Ukraine will reduce the supply of sunflower oil on the world market

Usually, palm oil was the cheapest among other vegetable oils due to lower quality and was traded at a discount of 100-150 $/t relative to soybean oil and 200-300 $/t relative to soybean oil.

But in the current season, amid a sharp increase in world soybean production, quotes for soybean oil in Chicago fell to 910 $/t and are trading at 220 $/t lower than palm oil in Malaysia.

February futures for palm oil on the Bursa exchange rose to 5032 ringgit/t or 1135 $/t due to increased demand for palm oil from the biofuel industry, especially in Indonesia (the world’s largest producer of this product), as well as the strengthening of the ringgit against the dollar and lower crop forecasts.

In MY 2024/25, the share of palm oil in the global vegetable oil production will be 36%, soybean oil – 30%, rapeseed oil – 15%, and sunflower oil – 9%.

Decrease in world production of sunflower oil in the current season by 11% should support prices and increase the premium compared to soybean and palm oil, but so far the prices of Ukrainian oil remain lower than palm oil and amount to 1100-1120 $/t FOB.

The decline in demand for Ukrainian sunflower oil is due to the reduction of imports by European buyers amid increased local production of soybean and rapeseed oil.

According to the European Commission, oil imports to the EU decreased by 21% compared to the previous season, including soybean oil by 66%, rapeseed oil by 50%, palm oil by 18% and sunflower oil by 17%. As of December 1, the EU imported only 832 thousand tons of sunflower seeds.

At the same time, EU countries increased imports of oilseeds and soybean meal. Compared to the same period of the previous season, imports of oilseeds to the EU increased by 8%, including soybeans – by 7%.

Decrease in sunseed production in Ukraine from 15 to 10-11 mln tons compared to last year will reduce the supply of sunflower oil on the global market. However, after the beginning of the full-scale invasion of Ukraine, Russia increased exports of sunflower oil to China and India (the world’s main importers of this product) and displaced Ukraine from the position of the leading supplier due to significant discounts and deepening cooperation with these countries.

Tags: Ukraine, sunflower oil, soybean oil, prices, sunseed, crop forecast