Ukraine VS russia: the battlefield is the sunflower oil market

Ukraine and russia traditionally remain the world’s top sunflower growers. MY 2021/22 passed amid a bumper harvest of this oilseed. However, the key factors determining developments in the second half of the season is the war between russia and Ukraine, which began at the end of February this year.

The sunflower harvest is a record in two countries, the increase compared to last year was 18%. Ukraine does not apply the methods of state regulation when exporting sunflower oil, in Russia there is a quota and a floating export duty to support the domestic market. Oil exports from Ukraine decreased by 15%, from Russia – by 27%.

The beginning of the season was successful for Ukraine and traditional in terms of export volumes, but the port blockade caused them to slump in March 2022. Then sunflower oil exports gradually recovered by the end of the season thanks to resolving logistical problems, a partial switch to land transport, as well as the launch of the “grain corridor”. The country shipped abroad just 64% of its exportable supplies initially estimated at 7 M mt.

Shipments from russia have been uneven through the season, being dependent on the floating tax rate, but their volume has fluctuated at a lower level than in the last two seasons.

For most of the season, sunflower oil prices have been losing competition to soybean and palm oils.

In Ukraine, there was a reorientation of sales markets towards Europe and Turkey. In Russia, Turkey has strengthened its position as a key buyer, in addition, the growth of shipments is noted in the direction of India and Egypt.

In 2022/23 MR, the sunflower harvest in Ukraine will decrease due to a reduction in the sown area, while in Russia the area has reached a record and a new harvest maximum is expected. Accordingly, oil exports from Ukraine will decrease, while those from Russia will increase.