Black Sea sunflower oil prices decline due to pressure from other vegetable oils

This came amid ample supply of soybean oil, a relatively wide price differential between soybean oil and sunflower oil and falling prices of other vegetable oils, which combined to put pressure on the entire complex and prompt buyers to turn to alternatives.

“Sunflower oil prices are falling due to ample supply of soybean oil from suppliers, and falling prices of other soft oils and palm oil,” Anilkumar Bagani, head of research at Mumbai-based brokerage Sunvin Group, told Fastmarkets.

“Overall, this is putting downward pressure on sunflower oil prices as they [were] unusually high compared to competitors,” Bagani said.

Why have sunflower oil prices fallen?

The results of the last two Egyptian tenders emphasized two points. First, Egypt, a major importer of vegetable oils, still has large stocks of sunflower oil. Second, the tenders’ focus on buying more soybean oil than sunflower oil meant that the country’s demand for soybean oil was higher.

At the same time, some sources believe that Egypt’s state procurement agency GASC did not purchase sunflower oil because of its high cost compared to soybean oil, which worried some sunflower oil sellers.

“Sunflower oil sellers, frightened by this picture, went out to sell and cover all the demand that was there. But there is no panic on the part of sellers, and not everyone is ready to sell at any price, as the refining margin does not have a big gap,” said Sergey Repetsky, managing partner of Sunstone Brokers, referring to the relatively low production margin, which suggests that oil-extraction companies will not be interested in producing large quantities of sunflower oil.

“Most likely, in early August, sunflower oil prices will be able to recoup the fall, and by the new harvest the price will increase by an average of $30 per ton,” Repetsky said, commenting on further price dynamics in case of supply cuts.

Meanwhile, the price differential (also known as spread) compared to the old crop has not increased since the new crop began trading.

“The minimal spread between the old and new crop indicates, on the one hand, a sufficient supply of the old crop and, on the other hand, concerns and uncertainty about the size of the new crop,” Repetsky said.

Sunflower oil prices have fallen sharply

Over the past two weeks, prices for sunflower oil supplies to the Black Sea region have fallen by $40-50 per ton, or 3-5% for July shipments on CIF Turkey and CIF India terms.

At the time of publication, prices for Black Sea sunflower oil were in the range of $985-990 per ton against a purchase level of about $970 per ton.

Sunflower oil of Ukrainian origin on CIF India terms with delivery in July-August was offered at the beginning of the week at $1070 per ton. However, by Thursday, an increase in supply levels caused offers to fall to an average of $1040 per ton.

Similarly, prices with delivery to Turkey were at $1,005/ton at the start of the week, but fell $20/ton to $990/ton by Thursday, while the number of sellers with volumes to clear increased.

At the same time, spot buyers at Ukrainian ports spoke of only moderate supply from the country’s sellers, despite falling prices.

Spot prices in Ukraine’s main ports fell by an average of $20 per ton during the week and at the time of publication prices in deep-water ports were in the range of $900-905 per tonne CPT POC from sellers and $890 per tonne CPT POC from buyers.

At the same time, according to official data, sunflower oil exports from Ukraine this month, as of June 26, totaled 399,594 tons, which gives every reason to believe that June exports will be the lowest since November 2023 and possibly more than 40% below the record export level recorded in May, when it exceeded 714,000 tons.

Ukrainian analysts expect that sunflower oil production in the 2023/24 season could reach 6.1 million tons, while exports could increase slightly to 5.7 million tons. From September 2023 to June 26 this year, 5.5 million tons of sunflower oil have already been exported.

Tags: Ukraine, sunflower oil, prices, Black Sea region