Uncertainty in the oil market has caused sunflower seed prices in Ukraine to plummet

The sharp decline in purchase prices for new-crop sunflower seed in Ukraine is linked to uncertainty in the sunflower oil market. According to Serhiy Repetskyi, co-founder and partner at Sunstone Brokers, crushers do not know at what price they will be able to sell sunflower oil in the autumn and are therefore unwilling to buy raw materials at high prices and assume significant price risks.

Demand for sunflower seed currently remains weak. Some Ukrainian plants continue to process rapeseed and are likely to do so until at least October 1, while large crushing plants at ports are unlikely to fully resume operations in the near term. Under these conditions, crushers are lowering sunflower seed purchase prices to account for the risk of a potential decline in sunflower oil prices.

Higher logistics costs and war-related risks are adding further pressure. In recent weeks, domestic sunflower oil prices in Ukraine have fallen by around $20–25/t, while prices at destination markets have increased by $15–20/t. As a result, the spread between domestic and destination prices has widened to around $40–45/t, effectively covering higher freight, insurance and traders’ risk premiums.

The Danube currently remains the main export route for Ukrainian sunflower oil, with supplies moving to Europe and Türkiye, including via Romania and Bulgaria. Oil is mainly transported by barges in small lots of 1–1.5 thsd tons, occasionally reaching 2 thsd tons. According to the broker, shipments in large seaborne lots are unlikely to resume over the next two months.

At the same time, the Ukrainian sunflower oil market could face a supply shortage as early as September. Old-crop oil stocks are virtually depleted, while significant volumes of new-crop oil are not expected to enter the market until October as some plants continue crushing rapeseed. Türkiye is already seeking to secure its required September volumes, while demand could strengthen when European buyers return to the market. However, buyers are already expecting lower prices for October–December deliveries.