Black Sea sunflower oil prices decline as veg oil complex applies pressure

Black Sea sunflower oil prices have declined by 5% over the past 10 days after reaching season-high levels, trade sources told Fastmarkets on Thursday June 27

This came with an ample supply of soybean oil, a relatively significant price differential between soybean oil and sunflower oil, and falling prices for other vegetable oils, combining to put pressure to the entire complex and encouraging buyers to turn to alternatives.

“Sunflower oil prices are falling because of sufficient supply of soybean oil at origins, and declines in other soft oils and palm oil prices,” Anilkumar Bagani, head of research at Mumbai-based cooking oil broker Sunvin Group, told Fastmarkets.

“In general, it is pressing the sun oil price to be softer because it has [been at] an unusual premium over the competition,” Bagani said.

Why did sunflower oil prices decline?

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

At the same time, some sources believed that Egypt’s GASC, the state-backed buying agency, did not buy sunflower oil because of its high cost compared with soybean oil – a dynamic that has disturbed some sunflower oil sellers.

“Sunflower oil sellers, frightened by such a picture, came 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, since the crush margin does not have a big gap,” Sergey Repetsky, managing partner of Sunstone Brokers, said, referring to relatively poor production margins that suggested crushers would not be keen to produce a lot of sunflower oil.

“Most likely, in early August, prices for sunflower oil will be able to win back the fall and the price will rise by an average of $30 per tonne before the new harvest arrives,” Repetsky said, in regard to the further development of prices should supply tighten.

Meanwhile, with the new crop beginning to trade, the price differential – also known as the spread – versus the old crop has not increased.

“The minimum spread between the old and new harvest indicates, on the one hand, sufficient supply of the old, and, on the other hand, fears and uncertainty regarding the size of the new harvest,” Repetsky said.

Sunflower oil prices slump

Black Sea sunflower oil supply levels have fallen by $40-50 per tonne over the past two weeks, or by 3-5% for July delivery on a CIF Turkey and a CIF India basis.

At the time of publication, Black Sea sunflower oil prices were in the range of $985-990 per tonne against buying levels around $970 per tonne.

Sunflower oil of Ukrainian origin on a CIF India basis, for delivery in July-August, was heard offered at the beginning of the week at $1,070 per tonne. But by Thursday the increase in supply levels meant that offers had fallen to an average of $1,040 per tonne.

Along the same lines, delivered prices into Turkey started the week at $1,005 per tonne, but had slumped by $20 per tonne by Thursday to $990 per tonne, while the number of sellers with volumes to clear had increased.

At the same time, spot buyers in Ukraine’s ports spoke about only moderate supply from the country’s sellers, despite the fall in prices.

Spot prices in Ukraine’s main ports fell by an average of $20 per tonne over the week and, by 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, Ukrainian exports of sunflower oil this month, up to June 26, amounted to 399,594 tonnes, giving every reason to believe that June exports would be the lowest since November 2023 and maybe more than 40% lower than the record export level reported in May, when it exceeded 714,000 tonnes.

According to the expectations of Ukrainian analysts, sunflower oil production in the 2023/24 season may reach 6.1 million tonnes, and exports may increase slightly to 5.7 million tonnes. From September 2023 to June 26 this year, 5.5 million tonnes of sunflower oil have already been exported.

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