Ukraine’s sunoil crush, production outlook tainted by war: The big read

Buyers of Ukrainian sunflower oil forced to look for alternative sources of supplies as Russian invasion disrupts trade

Ukraine’s place as the world’s biggest exporter of sunflower oil means the Russian invasion has brought profound changes to a vital global industry and will bring consequences for some of the sector’s biggest customers – namely India and China.

While much of the price reaction to the Russian invasion has been most acute in wheat prices, as end users struggle to plug a massive short term loss of supply options, for sunflower and the wider vegetable oils complex the war is having far reaching and more permanent consequences.

Since Russia’s military invasion of Ukraine began on February 24, exports of sunflower oil from Ukraine have virtually come to a halt, resulting in higher vegetable oil prices on all bases and a redistribution of trade flows.

Trade on the basis of FOB and CPT in Ukrainian ports has stopped, while the largest buyers of Ukrainian sunflower oil – India, China, EU countries, have been forced to look for alternative sources of supplies.

Fastmarkets Agriculture last assessed the market at $1,540 per tonne in the wake of the Russian invasion, but the broader complex has charged higher since then with staple soyoil futures trading on the Chicago exchange standing at 74 cents/pound on Wednesday, or over $1,648 per tonne.

But Ukraine’s crush sector had been operating reasonably normally in the run up to the conflict, with Fastmarkets Agricensus research suggesting that more than 30 major sunflower oil producers in Ukraine have overstocked storage capacities and an almost total lack of opportunities to unload due the hostilities in Ukraine and the blocking of the port infrastructure.

According to the analytical agencies of Ukraine, between 93% and 97% of sunflower oil exports passed through the ports of Ukraine, leaving just 3% to 7%, depending on the month, to be exported by land.

Meanwhile, a switch in Russian tactics has meant logistics, cities and other key areas are increasingly being targeted, raising fears that significant damage is now being inflicted at major facilities and disruption to supply routes will be long term.

Only this week, the Ukrainian Sea Ports Administration stated that a Russian-led attack on the port of Mykolaiv on the night and morning of March 22 brought significant damage to the port’s infrastructure.

According to line-up data, more than 45% of Ukrainian sunflower oil exports passed through the ports of Mykolaiv.

Difficulties and ways to solve them

Individual crushers in the Western and Central part of Ukraine have continued crushing and are looking for opportunities for export through countries bordering Ukraine, with much of the focus falling on Poland, Romania, and Moldova.

But they face certain difficulties in achieving that.

Moreover, difficulties with incompatible logistics complicate this option as a meaningful way of exporting sunflower oil from the country, with a lack of wagons, trucks and fuel contributing to some of the limitations.

Another feature of working with Bulgarian and Romanian ports is the fact that all loading terminals are privately owned and as such are not available for rent in order to store Ukrainian sunflower oil.

Moreover, the possibility of leasing any terminal for Ukrainian sunflower oil is not considered by Bulgarian and Romanian companies, as current high sunoil price levels mean that everyone is taking any opportunity to sell their own goods.

“No one out of these companies agrees to rent their own oil terminals to the Ukrainian competitions, as this way they could not use them to move their own sunoil,” a source at brokerage AgriVia told Fastmarkets Agricensus.

“And today the oil is so expensive that logistics here is the key to get a good price and manage to export your oil out of Varna or Constanta,” added the source.

Those Ukrainian companies that do have their own oil tankers, or can rent them, are selling sunflower oil on the basis of DAP – delivered at place – to the ports of Bulgaria at below market prices in order to free up the tanks.

To date, market sources said trading levels are reported at around $1,950-2,000 per tonne DAP Varna to Fastmarkets Agricensus.

“The end European customer does not want to buy high and expects prices to drop as the market becomes over-saturated. Some companies sold oil 7-10 days ago with delivery in April-May,” added a source based in Bulgaria.

Of the 72 medium and large crushers in Ukraine, both extraction and pressing, no more than 5 enterprises that are located in the territory controlled by Ukraine continue to work, with those plants that are operating only running at a minimum load level.

Having access to their own or rented vehicles could allow some crushers to export small quantities of sunoil, in the region of about 100-500 tons per day.


One of the challenges facing Ukrainian producers of sunflower oil is the need to obtain a license for its export.

On March 5, 2022, the Cabinet of Ministers of Ukraine introduced a mechanism for issuing licenses and quotas for the export of a number of products including corn, wheat, sunflower oil, rye and others.

The measure was introduced in order to ensure food security, although businesses within the sector regarded the decision as unnecessary, given the almost complete absence of exports.


Against the backdrop of limited export capacity, and the tangible cap on exports, the search for replacements across has taken on new vitality.

The main export destination in 2021 for Ukrainian sunflower oil was India, which imported more than 30.5% of Ukrainian sunflower oil, according to the industry association Ukroilprom.

The lack of Ukrainian supplies has already led to a jump in prices and a search for “alternative oils and sunflower oil from other origins, mainly Argentina,” in the words of Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group.

Sources based in India also do not exclude the purchase of Russian sunflower oil to replenish the missing volumes.

China is the second largest buyer of sunflower oil and still currently considers Ukraine as a supplier of sunflower oil – both of these countries have tried to tread a delicate balancing act in remaining neutral amid an increasingly divided international response to the crisis.

Meanwhile, sources based in EU countries suggest that Ukrainian sunflower oil will be replaced by alternative oils such as rapeseed, soybean and palm – and that’s the factor that is driving the wider complex higher.

The main supplier of soybean oil to the EU is oil crushed in Spain, Argentina and Brazil, with rapeseed from Australia, France, Spain, and palm oil from Colombia, Guatemala, Malaysia, Indonesia.

Sowing 2022

One of the tasks facing the whole of Ukraine and the oil and fat industry in particular is the 2022 sowing campaign.

The likelihood of a decline in acreage under oilseeds such as sunflower and soybeans is very high, mainly due to a reduction of planted area in locations that are damaged as a result of hostilities, or where hostilities continue to take place, as well as in territories occupied by Russian troops.

According to the estimates of the Ministry of Agrarian Policy, announced by the Deputy Minister of Agrarian Policy and Food of Ukraine Taras Vysotsky during an online broadcast from the AgroPortal on March 15, Ukrainian farmers in 2022 will sow about 50% of the planned areas for spring crops.

On top of that, 30% of the expected sowing may start but will not be fully completed, with some 20% of the total area unlikely to be even started.

“If we talk about even 50% of the sown areas, then there will be more than enough for domestic consumption,” Vysotsky explained.

Difficulties with fuel, fertilizers and seed materials in some areas will also have a negative impact on the plans of agrarians, although the Ministry of Agrarian Policy of Ukraine has provided assurances that – due to the reduction in sown areas – the provision of seeds – at 70% of total supply – and fertilizers – at 80% – is quite good.

According to preliminary estimates by analysts at the Ukrainian-based APK-Inform analytical agency, the sunflower acreage could fall by 35% to a 13-year low of 4.2-4.4 million hectares, which would reduce the crop to 10 million tons.

The decline is largely down to fighting taking place mainly in the main oilseed growing regions – Mykolaiv, Kherson, Zaporozhye regions (in the south of Ukraine) and Kharkov, Donetsk, Lugansk regions (in the east).

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