Stabilization of sunflower oil prices supports sunseed prices in Ukraine

Despite the prolonged decline in palm and soybean oil prices, sunflower oil prices have stabilized as the market expects a decrease in sunflowerseeds supply in Ukraine and the EU this season, so processors are actively building up stocks, hoping for a resumption of vegetable oil price growth in the future.

During the week, demand prices for sunflower oil in Ukraine remained at $1,220–1,230/t (-$30/t per month) for delivery to ports in December, and prices for deliveries to India were at $1,300–1,310/t CIF Mumbai, although palm oil prices fell by 5.5% amid a slowdown in exports.

The weather in Ukraine, especially excessive rains in the west, does not allow for the completion of harvesting of late crops, which leads to yield losses and a decrease in the quality of harvested sunflower.

As of November 20, 9.01 million tons of sunseed were harvested in Ukraine from 4.74 million hectares or 92% of the area (+2% per week) with a yield of 1.88 tons/hectare (last year at this time, 10.07 million tons were harvested from 97% of the area with a yield of 2.08 tons/hectare).

Processors expect that the last million tons of sunseed that farmers will harvest will have a high acid number, so in their calculations they are focusing on a harvest of about 9 million tons and are not reducing purchase prices, despite the rather high stocks at the factories.

Purchase prices for sunseed increased by 200-300 UAH/t per week to 28,400-29,000 UAH/t or $590-600/t excluding VAT (for 50% oil content) with delivery to the plant, although some plants are experiencing disruptions in reception due to constant air alarms and power outages.

It should be noted that while last week some processors significantly reduced prices while others maintained high prices, now they have all leveled out to the same level. This means that traders do not expect any fundamental changes in the market in the near future.

Demand prices for sunflower meal in Ukraine increased by $5/t over the week to $205-210/t with delivery to ports and to $225-230/t with delivery to the western border, supported by an increase in prices for feed barley, wheat, and corn by $3-5/t.

In the coming weeks, the market will remain in anticipation of the completion of the sunflower seeds harvest in the Black Sea region and the growth of demand from India for palm oil, which has fallen sharply in price, which will stop the fall in its prices. In Russia, as of November 14, 16 million tons of sunseed were harvested from 85% of the areas, so the harvest potential remains at 17-17.5 million tons compared to 16.5 million tons last year, despite the fact that the harvest in the southwestern region decreased by 18% compared to last year due to drought. It is not yet clear whether farmers in the east of Russia will be able to thresh another 15% of the areas, as the regions are already gradually covered with snow.

Tags: sunflower oil, prices, sunseed