Black Sea sunflower oil prices on the FOB market surged above $1,000/mt on Nov. 5, trading at $1,015/mt for December loading, as the tight Black Sea sunflower crop and rallying external markets lifted prices.
It is the highest price level reached since the launch of the S&P Global Platts Black Sea sunflower oil assessment in December 2018. Prices at this level stand 12.7% higher on the month and 45.8% higher on the year.
Bullish supply fundamentals in the Black Sea sunflower oil market is supporting the market. Drought-like conditions in Ukraine and Russia through the summer has seen sunflower seed crop yields fall below expectations. Harvests and oil content in these major producing countries have been hampered as a result of the adverse conditions during the growing phase of the crop.
The Black Sea harvest of the sunflower seed crop has neared completion. As of Nov. 2, Ukraine has harvested 12.1 million mt of sunflower seeds from an area of 6.06 million hectares, around 95% of the planted area according to the Information and Analytical Portal of the AIC of Ukraine. In Russia, 8.2 million hectares, around 97% of the planted area, have been harvested producing 12.8 million mt as of Nov. 5, according to the Russian Agrarian Ministry. Market estimates suggest total produced volumes will be higher than these official figures due to unreported areas of production. However, the total forecasted Black Sea crop for the 2020-21 season, between 26 million mt and 28 million mt according to market estimates, will still fall short of last year's crop.
In the 2019-20 season, Ukraine produced around 16.5 million mt of seeds with yields at 2.6 mt/ha. Russia produced an estimated 15.4 million mt of seeds at a yield of 1.83 mt/ha. Yields in Ukraine and Russia for the new 2020-21 harvest currently average at 2 mt/ha and 1.6 mt/ha, respectively.
The tighter-than-anticipated sunflower seed crop across the region has seen crushers compete for seeds, and selling of seeds from farmers has been slow. This underlying supply dynamic has supported oil prices, but strong externals gave prices an extra push on Nov. 5.
Rallying soybean, soybean oil, palm oil, rapeseed oil and crude oil markets "put a resistance on selling appetite" in the sunflower oil market, said a trader on Nov. 5.
