The Eastern New Year and falling palm oil prices are putting pressure on sunflower oil prices

Black Sea sunflower oil sellers are forced to look for new buyers as demand from Asian countries falls amid heavy inventories, New Year celebrations and increased competition from soybean and palm oil, Agricensus reports.

China reported large stocks of sunflower oil and India increased its purchases of sunflower oil from Argentina after the cost of freight from the Black Sea rose due to Houthi attacks on ships in the Red Sea.

According to the SEA agency, in November – January, India increased the import of Argentine sunflower oil compared to the same period of the previous year by 70% to 119,000 tons, although it is inferior in quality to Black Sea oil. However, the cost of freight from Argentina to India is $83-90/t, which is 20% less than the freight from the Black Sea region, which reaches $100-120/t CIF India. At the same time, Argentine sunflower oil is on average $20/ton more expensive than Black Sea sunflower oil.

According to SEA data, in January the import of vegetable oils to India decreased by 8.4% compared to December to 1.2 million tons, in particular palm oil – by 12.4% to 783 thousand tons, sunflower oil – by 15.6% to 220 thousand t, while soybean rose by 23.7% to 18.9 thousand t. Imported crude palm oil (CPO) in India is offered at $932/t CIF for delivery in March, while soybean and sunflower are at $919 and $925 $/t CIF respectively.

Demand prices for sunflower oil with delivery to buyers for the week fell by 2.5% to $825/t. In Ukraine, they are $740-750/t for deliveries to Black Sea ports and $780-800/t for deliveries to Bulgaria.

In Argentina, despite the reduction of the soybean harvest in the 2022/23 FY, sunflower production remained at a high level, so the volume of its processing in 2023 reached a 10-year maximum of 3.9 million tons. In the current season, the soybean harvest will increase from 25 to 50-55 million tons , and sunflower production will also be high.

March soybean oil futures on the Chicago Stock Exchange rose 4.7% during the week to last month’s level of $1,033/t, reversing the previous week’s decline supported by rising oil prices. However, the crisis in China will increase pressure on oil prices in the near future.

The price difference between soybean oil and sunflower oil continues to narrow, making soybean oil more attractive in price. Chinese buyers have not been interested in Black Sea sunflower oil for more than a month, as they have significant reserves. A decrease in demand from Asia increased supplies of sunflower oil to the markets of Turkey and the EU.

Tags: prices, palm oil, sunflower oil