Despite the decline in sunflower production in major sunflower oil-producing countries, the global market is not experiencing a product shortage. This decline has been offset by high soybean and rapeseed harvests.

This was stated on 12 February during an online meeting of the Trend&Hedge Club, where ASAP Agri is an information partner, by Serhii Repetskyi, partner at Sunstone Brokers.

In his presentation, he specifically discussed the low sunflower processing margin this season, declining demand from key sunflower oil importers, and increasing competition from soybean and rapeseed oils.

Low margins despite a smaller harvest

In the first half of the season, sunflower processing volumes in Ukraine have significantly declined.

"Over the past two months, we have observed the lowest processing levels in the past 18 years," said Serhii Repetskyi.

The beginning of 2025 resembles 2015 when the sunflower processing margin was zero or even negative, creating additional pressure on the industry.

Against this backdrop, European processors — particularly in Moldova, Romania, Hungary, and Bulgaria — prefer exporting sunflower seeds to Turkey rather than processing them, as it is more profitable.

At the same time, low margins and reduced processing in the first half of the season have led to an accumulation of sunflower stocks in Ukraine, despite the smaller harvest.

Meanwhile, Russia presents the opposite situation: higher processing levels and a smaller harvest have led to lower stocks compared to last year. This could limit farmers' sales in the short term, Repetskyi noted.

Turkey: Strong demand for raw materials, uncertainty for oil

Turkey, one of the key buyers of Ukrainian sunflower oil, continues actively importing sunflower seeds, benefiting from zero import duties and a 1 MMT quota, allowing local factories to offset the raw material deficit.

"The Turkish market is currently willing to pay attractive prices for Ukrainian sunflower seeds, even considering the decline in global prices. However, as the market gets saturated, prices are gradually falling," said Serhii Repetskyi.

Regarding sunflower oil, Turkish buyers are currently focused on purchasing before Ramadan, which is supporting short-term demand.

"In recent weeks, we have observed an interesting trend: sunflower oil prices on a CIF Mersin basis have increased by 15 USD/MT, while sunflower seed prices have dropped by 8 USD/MT. This indicates an oversupply of raw materials compared to processing products," the expert explained.

The Turkish market is expected to fulfill its main oil demand in the next two weeks, after which activity may decline for 3-4 weeks.


Rapeseed and soybean oils are displacing sunflower oil from key markets

The biggest drop in demand for sunflower oil this season has been observed from China, which is increasing its domestic soybean oil production.

Meanwhile, rapeseed oil from Canada and Australia is actively pushing sunflower oil out of Europe.

"Sunflower oil consumption in Europe has fallen by 30%, while the spread between sunflower and rapeseed oil has reached 110 USD/MT," noted Serhii Repetskyi.

A smaller rapeseed harvest in Europe has been offset by significant imports from Canada and Australia, causing rapeseed oil prices to drop. As a result, rapeseed oil has completely displaced sunflower oil from the energy market and continues pushing it out of the food sector, similar to what happened in 2022.

Forecast: Is there hope for Ukrainian producers?

"Despite a significant decline in production, we do not yet see a shortage of sunflower oil on the global market. Perhaps it will emerge closer to the end of the season, but for now, this is not the case," emphasized Serhii Repetskyi.

The new sunflower and soybean harvests from Argentina will hold back price increases for sunflower oil from February to May. According to Sunstone Brokers, only 30% of Latin America’s new sunflower oil crop for March-May has been sold so far.

Demand for Ukrainian sunflower oil from Europe remains uncertain due to competition from other vegetable oils. A similar situation is observed in China. The only stable buyer remains India, which imports 250-300 KMT per month, despite a large spread with soybean oil. However, India is discussing a potential increase in import duties on sunflower oil, which could reduce purchasing interest.

A reduction in Russian sunflower oil supply due to low sunflower stocks could support demand for Ukrainian products. Moreover, "if the Russian ruble continues strengthening, Russian exporters may temporarily suspend sales, creating additional opportunities for Ukraine in the Indian and Turkish markets," the expert added.

Regarding price forecasts, Repetskyi believes that by April 1, it is unlikely that prices will exceed 1230 USD/MT on a CIF India basis or 1140 USD/MT on an FOB POC basis.

"Ukraine is no longer the key player in the global sunflower oil market, while the oil market has become more flexible and more dependent on macroeconomic factors," the expert concluded.