Increased Global Sunflower Production
According to recent forecasts from the United States Department of Agriculture (USDA), global production of oilseeds, including sunflowers, is set to grow by 7% in the 2023/24 season. This increase is primarily attributed to significant production booms in soybeans in South America and sunflowers in the European Union, Ukraine, and the Russian Federation. The global sunflower production for the 2022/23 marketing year (MY) is expected to rise by 1.2 million tons to 51.64 million tons, with Ukraine and Argentina contributing significantly to this growth.
Despite the introduction of a ban on the supply of domestic sunflowers to five EU countries, Ukraine is projected to see a production increase of 0.8 million tons to 11.2 million tons. Argentina is also expected to boost its production by 0.4 million tons to 4.2 million tons. These increases, however, may not directly translate to a similar rise in exports, as highlighted by the decrease in Ukraine’s sunflower exports from 200,000 tons in March to 40,000 tons in April due to the ban.
Future Projections and Market Challenges
The sunflower production outlook for the 2023/24 season looks promising, with global production expected to rise from 51.6 to 54.3 million tons. Increases are projected across major producing countries, including Ukraine (from 11.2 to 11.8 million tons), the EU (from 9.3 to 11.5 million tons), and the Russian Federation (from 16.2 to 16.5 million tons). However, Argentina may see a production drop from 4.2 to 3.9 million tons.
Despite the positive production outlook, the global sunflower market is not without its challenges. The USDA forecasts a decrease in sunflower exports in the new season from 5.3 to 3.6 million tons. Ukraine’s exports are projected to decline significantly from 2.55 to 0.7 million tons. The drop in exports is expected to lead to a decrease in final stocks from 4.4 to 3.7 million tons.
Implications for Ukraine’s Sunflower Market
In Ukraine, the increase in production and decrease in exports have created a stalemate situation in the sunflower market. Refiners have halted production as they cannot ship oil through Black Sea ports, and the EU market is oversupplied, leading to a drop in sunflower oil prices to $750-780/t FCA plant. The impasse has also affected domestic prices, with purchase prices for sunflowers falling to UAH 14,000-15,000/ton.
The increased demand from feed manufacturers, due to plant shutdowns and supply shortages, has led to a rise in meal and cake prices to UAH 9,000/t. The situation in Ukraine underscores the need for strategic planning and market adjustments to accommodate the increased production, decreased exports, and ongoing challenges in the global sunflower market.