Ukrainian Sunflower Oil Prices Surge in August 2023 Amidst Supply Disruption and Rising Demand

The prices of Sunflower Oil demonstrate an increased trend across the European region, primarily in the Ukraine and Russia, leading the suppliers to worry about their trade momentum. Since the start of the third quarter, the prices for Sunflower Oil have been rising rapidly in exporting countries such as Ukraine, one of the major producers of Sunflower Oil, along with others like Russia, and is expected to end this quarter on an optimistic note. The ongoing trade war between Ukraine and Russia boosted this.

Despite logistical challenges and Russian attacks on Ukraine's main export routes, which further impacted the supply chain momentum of Sunflower Oil in the nation and caused even higher prices, Ukrainian agricultural exports increased by 16% in August compared to July to about 4.3 million metric tons. Additionally, Ukraine continues investigating alternative export routes for its agricultural goods, including Sunflower Oil, like the Danube or rail travel through Poland. Early in the conflict, Russian attacks caused havoc on the Danube River. However, the Ukrainian government announced in August 2023 that exports via the river had resumed. This significantly boosted the nation's agricultural industry by enabling Ukraine to sell its goods on global markets, raising the price of Agricultural products, including Sunflower Oil, locally and globally.

In addition, the trade war has increased the price of transportation, including rising fuel costs. This has also contributed to the global and Ukrainian price increases for Sunflower Oil. The war has increased the cost and difficulty of securing ships moving goods through the Danube River. This is due to the increased possibility of mines or other hazards causing ships to be damaged or sunk. These factors have made it much more expensive than it was before the war to transport grain and other agricultural products through the Danube River. This makes it more challenging for Ukraine to export its goods, including Sunflower Oil and adds to the global food crisis.

In continuation, the cost of agricultural inputs, such as fertilizer and fuel, has risen recently. The MY 2023/24 global sunflower seed production forecast is raised this month by nearly 1.1 million metric tons to 55.8 million metric tons in Ukraine and combined with the carryover stocks from 2022/23 estimated to be approx. 5.6 million metric tons and the imports forecast of nearly 3.4 million metric tons, the global sunflower seed supply for 2023/24 is further projected to be around 64.9 million metric tons, a marginal rise from the previous year. This further resulted in higher prices of Sunflower Oil. Similarly, Ukraine's 2023/24 sunflower seed crush is raised this month by around 0.6 million metric tons to about 12.7 million metric tons. With higher supplies of Sunflower Oil and sunflower seed meal, the exports of the Sunflower Oil and meal were raised this month to close to 0.20 million metric tons and approximately 0.25 million metric tons, respectively.