Sunflower is getting cheaper, margins are melting: why the Ukrainian oilseed market has entered a phase of price stress
14 November 20:55
Against the backdrop of rapidly filling the market with a new harvest and unfavorable conditions in the oilseed segment, the purchase price of sunflower in Ukraine has fallen. This is reported by "Komersant Ukrainian" with reference to information from the Electronic Grain Exchange of Ukraine.
In the first ten days of November alone, average demand prices fell by another UAH 200-500 per ton, dropping to the level of UAH 27,400-28,500 per ton (excluding VAT, with 50% oil content, delivery to the plant). In dollar terms, this corresponds to approximately $573-595 per tonne on a CIF plant basis. For comparison, in early fall, similar prices exceeded 25-26 thousand UAH/t, and in October they were close to 30 thousand UAH/t.
Experts note that the fall in sunflower prices followed the collapse of the sunflower oil market and the increase in the supply of seeds. The decline in external quotations quickly affected domestic purchases: some processors promptly lowered the purchase prices, as they had already accumulated sufficient stocks of raw materials and sought to maintain margins. At the same time, some other crushers kept sunflower prices higher for some time, hoping to attract more sales from farmers. However, overall, speculative demand for seeds has decreased, and the market has moved from a shortage to a more balanced supply of raw materials, which has led to a retreat in prices to current levels.
Sunflower oil is getting cheaper due to palm oil: global market vs India
The key factor that “pulled” the Ukrainian sunflower market down was the collapse in global vegetable oil prices. Over the past month, palm oil quotations on exchanges have fallen by about 10%, and in just two weeks in late October and early November, sunflower oil fell by $40 to $50 per ton. As of mid-November, demand prices for Ukrainian sunflower oil dropped to $1,220-1,230 per tonne FOB (delivered to ports). Thus, we have a minus of $10-20 per week, and a total of about $50/t loss in price for two weeks. Sergiy Repetsky, partner of Sunstone Brokers, confirms that last week sunflower oil showed the biggest drop among all types of vegetable oils: its price on FOB basis fell by $60 from the beginning to the end of the week.
The global decline began with palm oil, where the overproduction factor was triggered: in Southeast Asia, stocks increased and exports decreased, which led to a rapid price drop – palm oil fell by $20-30 daily. This collapse pulled down the stock prices of soybean oil, and thus sunflower oil, as demand for it was very sluggish. The main problem is that the spread between sunflower oil and other types of oil is too wide.
According to analysts, in early November, the price difference between sunflower and palm oil reached $200 per ton (CIF India), and between sunflower and soybean oil – about $180. In Europe (Spain, the Netherlands), the spread exceeded $120. This disparity made sunflower oil relatively too expensive, and importers began to switch to cheaper substitutes.
India, the world’s largest buyer of oil, has actually stopped purchasing Ukrainian sunflower oil. According to Serhiy Repetsky, the Indian market has not bought sunflower oil at all for the second week in a row. Indian processors preferred palm oil, as the price difference was too high: about $200/t in favor of palm oil. In addition, importers in both India and the EU had managed to build up oil stocks for November-December in the previous months, so there is no new active demand in the near term. Thus, Ukrainian producers have lost a significant share of sales in key markets in Asia and Europe, which has created excessive supply pressure on the export side.
Additionally, global oilseed prices were pressured by positive news from Latin America. For example, Argentina forecasts a record sunflower harvest of 6.1 mln tonnes this season, while favorable weather in Brazil and Argentina reduces concerns about future supply. Even Argentine sunflower oil offers at $1170/t FOB are not yet in sufficient demand. This signals that the competition between the main types of vegetable oils is intensifying, and buyers will buy the cheapest options until the price gap is reduced.
Balances of the Black Sea region: EU in deficit, Russia with a record
Despite the reduction of the Ukrainian harvest, the overall picture of sunflower supply in the Black Sea region remains mixed. On the one hand, EU countries are experiencing one of the worst harvests in a decade. The European Commission estimates that in 2025, the EU will produce only 8.5 mln tons of sunflower, which is 3% more than last year’s disastrous figure, but the third lowest result in the last 10 years. Such a weak harvest in Europe means increased demand for imported oil. As European processors are forced to increase purchases of finished sunflower oil from Ukraine in the face of a shortage of seeds, they prefer oil to imported seeds. This partially supported Ukrainian oil exports in the fall, but the situation will depend on global price trends.
On the other hand, Russia harvested a consistently high crop and continues to hold its position as the largest sunflower producer. As of the end of October, 82% of the area (10 mln ha) was threshed in Russia and 15.1 mln tons were harvested, so the potential gross harvest is estimated at 16.5-17.5 mln tons, almost the same as last year (16.5 mln). This means that the total supply of seeds from the two key producers in the Black Sea region (Ukraine and Russia) will remain significant. The Black Sea region as a whole will harvest not much less sunflower than last year, and possibly more, depending on the final figures in Russia. Therefore, the region’s export opportunities remain high, and Ukrainian exporters will have to compete both with each other and with Russian suppliers on foreign markets.
Read also: Ukraine is increasing its agricultural exports: how much did sales increase in October
Analysts note that in the coming weeks, market participants will be monitoring the completion of the harvest in the Black Sea and adjusting prices in accordance with the updated supply and demand balances. For example, if the final volume of the Ukrainian harvest is closer to the lower limit of the forecast (about 10 million tons) and farmers hold back sales, the domestic market may see a second wave of growth in raw material prices. On the other hand, the large supply of cheaper sunflower oil from the region (and from Argentina) on the global market may restrain any recovery in prices. The balance of supply and demand in the Black Sea region remains under review, so price volatility will continue in the short term.
Deficit in the field, surplus on the stock exchange: is the Ukrainian sunflower market able to reverse the downward trend in prices?
In the short term, the Ukrainian market of sunflower and sunflower oil remains under the influence of contradictory factors. On the one hand, the domestic supply of seeds is lower this season, and a low harvest in the EU and a possible reduction in acreage next year due to the crop’s unprofitability may support prices. Some analysts expect that after the current price slump, the situation may turn around: processing companies that had previously held back purchases will be forced to increase demand again as soon as they feel the depletion of raw material stocks, which could push prices up.
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However, the risks of further decline also prevail. The global vegetable oil market is currently oversupplied: palm oil remains a much cheaper alternative, Argentine and Russian harvests are record-breaking, and demand from Asia is weakened by high stocks and price factors. If this trend continues, Ukrainian exporters will have to put up with low oilseed prices, which will not automatically raise domestic prices for seeds. Processors are also under pressure to maintain at least minimal margins. Therefore, they will be cautious about raising purchase rates until export revenues from oilseeds start to grow steadily.
The coming months will be a test for the entire Ukrainian oilseed industry. If the price downturn prolongs, some farmers may reduce their sunflower acreage next season, considering the crop to be unprofitable in the face of high production costs. At the same time, crushers, especially small ones, risk underutilization or downtime due to a lack of raw materials at an affordable price. Even in a pessimistic scenario, analysts advise keeping an eye on possible changes in global trends: any recovery in demand in Asia or a reduction in palm or soybean oil production could quickly return importers’ interest in Ukrainian products and cause a rebound in prices.
For the time being, the market will balance between the internal factor of a deficit harvest and the external factor of cheap competitive oils, shaping price trends under the influence of news about harvest results and trading activity of key buyers. Ukrainian producers and traders will have to be flexible in responding to the market situation to minimize risks during this volatile period.
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