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Ukrainian sunoil exports are expected to fall short of the final agreed export quota for the 2020/21 marketing year, as a combination of high prices and Covid-19 based demand destruction cut buying from importing nations, a Ukraine-based trade association has told Agricensus.
The cap was imposed after dry conditions led to a disappointing sunseed crop, prompting fears that the pull of export markets could drive domestic prices higher in a key staple product, but with a full quarter of the marketing year still to run, fats and oils industry association Ukroilprom are confident the cap will not be breached.
Exports since the September start of the marketing year through to the end of April have reached 3.9 million mt, according to a combination of official customs data and line up data, which would represent a 13.7% decrease on the same period last year.
That volume is equivalent to 72% of the 2020/21 export quota of 5.38 million mt, which was agreed between the industry and the government last month in a bid to keep retail sunoil prices in check for the rest of the marketing year.
Sunoil exports over the remaining four months of the 2020/21 marketing year are expected to come in at 1.267 million mt, Ukroilprom told Agricensus, taking the total to 5.2 million mt, some 200,000 mt short of the quota.
“[The fall in exports] is the consequences of a number of factors. The decline in the harvest is the main reason, but there are also other factors such as low demand and currently weaker prices, holding back fresh sales as crushers expect a price increase again,” an analyst at Ukroilprom told Agricensus.
The analyst also cited the problems at the Suez Canal, after the container ship Ever Given got stuck and blocked the canal in late March, causing a build up in shipping and significant delays that have slowed sales to India and China.
Detail
Ukroilprom expects sunoil exports in May to come in at 454,000 mt and tail off to 365,000 mt in June, 275,000 mt in July and some 173,000 mt in August.
“The decline [in exports] is due to the reduction in imports by the main buyers. High stocks of sunoil there and Covid-19 led to a decrease in demand from India. China had excess stocks in November-December, and they hoped to hold out [to buy again] until the end of June at least,” Sergei Nevsky from Spike Brokers told Agricensus.
Ukrainian sunoil prices hit a record high of $1,700/mt FOB in early March, more than doubling on the year on tight supplies and have eased since to around $1,558/mt FOB as surging prices eroded demand.
“Sunoil availability was very tight in producing countries such as Ukraine, Russia, Argentina and prices were very high. Additionally, the sunoil import margin in India was not sustainably positive,” Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group said.