The decrease of sunflower production in Ukraine usually inevitably led to the growth of sunflower/oil prices, as the country’s share in the world trade reached 45-46%, in 2021/22 MY – 40%. This was stated by Svitlana Kupreeva, the analyst of the oilseed market of UkrAgroConsult.
Forecasts for 2022/23 MY from USDA look rather pessimistic – Ukraine is forecasted to reduce the share to 33% and, accordingly, to lose the leading position. “UkrAgroConsult estimates the export of sunflower oil at the level higher than USDA.
Global balance looks quite different
The current 2022/23 MY is the exception to the rule. The sharp drop of sunflower harvest in Ukraine led not to the growth, but on the contrary – to the fall of prices for both sunflower and oil on the world market under the influence of the war. The situation with the harvest in Ukraine is catastrophic, a drop of 34% is rare. But the global balance looks quite different: production of oilseeds and oils is a record, production of sunflower oil is the 2nd record, sunflower stocks are a record.
Expectations for price growth did not come true due to the fundamental factors of the world market. The situation is also aggravated by the record low import demand for oil under the pressure of risks of transportation by the Black Sea. USDA forecasts the lowest demand since 2015/16 MY.
The attractiveness of the price of sunflower oil compared to soybean oil can change the situation for the better, the expert believes.
The crash margin calculation showed that sunflower processing is currently very profitable compared to the pre-war period. This is confirmed by the pace of production and especially exports of sunflower oil, which is quite a good result, given the sharp decline in the harvest.
However, against the background of active export of oil, there is an equally active export of sunflower. According to the results of the season, sunflower exports can significantly update the record.
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