Ukraine's Sunflower Market Faces High Prices as Processors Struggle to Meet Demand

Last week, sunflower prices in Ukraine surged to 25,500-26,200 UAH/ton, driven by limited supply and the urgent need for factories to meet sunflower oil supply contracts. However, processors have been trying to reduce prices since Monday, aiming for 24,500-25,000 UAH/ton, following an 8% drop in vegetable oil prices. Despite this, the smaller-than-expected harvest is forcing processors to keep prices high, especially for large orders.

Lower Harvest Puts Pressure on Prices

As of October 18, Ukrainian farmers had harvested 9.3 million tons of sunflowers from 4.5 million hectares, representing 91% of the planted area. With an average yield of 2.07 tons per hectare, the total harvest forecast was lowered to 10-10.5 million tons—significantly below the USDA’s estimate of 12.5 million tons. This supply shortage is keeping sunflower prices elevated, as factories continue to bid aggressively to secure enough sunflower stocks for oil production.

Sunflower Oil Prices Drive Market Trends

Sunflower oil prices have remained strong, helping to sustain high sunflower seed prices and improving margins for refiners. Over the past week, sunflower oil prices rose by $20-30 per ton, reaching $1,050-1,060/ton with delivery to Black Sea ports. The price of sunflower meal also increased by $5/ton, trading at $220-225/ton.

The sharp rise in sunflower oil prices was partly influenced by a tender in Egypt, where the purchase price surged to $1,185/ton C&F, buoyed by strong palm oil prices in Malaysia.

Global Vegetable Oil Market Overview

In the broader vegetable oil market, palm oil futures in Malaysia traded at a two-week high of 4,300 ringgit/ton ($1,000/ton), driven by strong demand. Similarly, soybean oil futures in Chicago rose 1.4% to $934/ton, though they remain relatively cheaper than other vegetable oils due to increased soybean supply in the U.S. and favorable planting conditions in Brazil.

Meanwhile, Brent crude oil futures fell 4.4% over the past week to $74.2 per barrel, losing the speculative growth caused by the conflict between Israel and Iran. Crude oil prices remain just 1.3% higher than last month, indicating a stabilization of the market.

Outlook: India’s Role in Supporting Oil Prices

India remains a key market that could support vegetable oil prices following a decline in demand from China. Should India continue to reduce its imports in October, oil prices could face further downward pressure. The sunflower market, in particular, will closely follow global demand trends, especially in light of the current supply constraints and high price levels.





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