World Grain - May 2022 - 14

GRAINMARKET REVIEW
OILSEEDS
Military conflict in Ukraine
sends prices sharply higher
by Chris Lyddon
The invasion of one of the world's two main producers of
sunflower oil by the other one has sent oilseeds prices, in an
already tight market shooting higher. Russia's invasion of
Ukraine has closed ports, ended shipping movements and
likely will have a profoundly adverse effect on future crops.
The International Grains Council (IGC) explained the importance
of the two countries to the market in sunflower seed
and, in particular, sunflower meal and oil, in its March 17
Grain Market Report.
" Although being important exporters of sunflower seed,
both Russia and Ukraine are the dominant suppliers of sunflower
meal and sunflower oil to the international market,
their aggregate share of traded volumes averaging about 80%
over the past five years, " the London-based organization said.
" As a consequence, the Black Sea conflict has had, and will
continue to have, significant ramifications for global shipment
flows for the foreseeable future, with volumes in 2021-22 and
beyond expected to be significantly restricted.
" Taking sunflower oil as an example, export prices for shipment
from Ukraine initially spiked higher in late February and
the early days of March on heightened concerns about the impact
of Black Sea events on world market availabilities. Given
disruption to trade flows and with exports now governed by an
export license system until the end of 2022, fob prices are no
longer freely quoted. Nevertheless, the impact can be gleaned
through recent trends in values at relatively minor origins, Argentine
(Up River) offers surging to a record of about $2,400
fob, up by around 70% in just a single month. "
The USDA's Economic Research Service (ERS), in its April
12 Oil Crops Outlook report, noted that sunflower oil prices in
Rotterdam swelled by over $1,000 in March to a record price
of $2,570 per tonne in anticipation of lower supplies spurred
by the Russia-Ukraine conflict.
" With limited port access in the Black Sea, reduced sunflower
seed crush, and potentially reduced new crop plantings,
sunflower oil prices are likely to remain high in the coming
months, " the ERS said. " Historically, sunflower oil is a
14
Sunflower oil monthly price
(US dollars per tonne)
1,200
1,500
300
600
900
Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22
Sunflower oil, US export price from Gulf of Mexico
premium-priced oil in many import markets due to its status
as a non-GM oil. It is the preferred oil in markets throughout
the Middle East and North Africa with consumption growing
rapidly in India and China. "
The record sunflower oil prices are expected to result in the
consumption of alternative oils like canola, soybean, and palm
oil, the ERS said.
" Since they are main substitutes, international soybean and
palm oil prices followed suit and increased this month by $219
and $238 per tonne, respectively, " the ERS said. " Soybean
oil nearby prices (FOB Brazil) surged to $1,752 per tonne in
March, which is $551 higher than the same period last year, a
46% increase. Similarly, palm oil prices (FOB Malaysia) have
advanced to $1,778 per tonne, 72% higher than in March 2021
and the highest since 2007-08. "
The UN Food and Agriculture Organization (FAO), in its
April 8 Food Price Index, said that global vegetable oil prices
had risen by 23% in March compared with the previous
month, to reach a record high. The FAO noted increases for
sunflower, palm, soy and rapeseed.
" International sunflower seed oil quotations increased substantially
in March, fueled by reduced export supplies amid
the ongoing conflict in the Black Sea region, " the FAO said.
" Palm, soy and rapeseed oil prices also rose markedly, buoyed
by rising global import demand in the wake of sunflower oil
supply disruptions. "
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to
worldgrain@sosland.com. For reprints of WG articles, email reprints@sosland.com.
May 2022 / World Grain / World-Grain.com
Source: International Monetary Fund
http://www.World-Grain.com

World Grain - May 2022

Table of Contents for the Digital Edition of World Grain - May 2022

World Grain - May 2022 - Intro
World Grain - May 2022 - 1
World Grain - May 2022 - 2
World Grain - May 2022 - 3
World Grain - May 2022 - 4
World Grain - May 2022 - 5
World Grain - May 2022 - 6
World Grain - May 2022 - 7
World Grain - May 2022 - 8
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