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UKRAINE/RUSSIA
Russia’s invasion of Ukraine has caused sunflower oil prices to spike and forced importers and manufacturers to search for alternative oils
Oil shortage takes hold Russia’s invasion of Ukraine has pushed up sunflower oil prices and created a shortage, prompting importers to turn to alternatives such as palm and soyabean oils. The invasion has also left poorer importing nations vulnerable to higher food and fuel prices Keith Nuthall and Imen Bliwa
18 OFI – MAY 2022
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The international oilseeds and related vegetable oil markets are facing major disruption through Russia’s invasion of Ukraine, with global vegetable oil prices soaring, according to the UN Food & Agriculture Organization (FAO). Its Vegetable Oil Price Index averaged 248.6 points in March, up 46.9 points (23.2%) from February, a new record high driven by higher sunflower, palm, soya and rapeseed oil prices. Sunflowerseed oil is a key problem, given Ukraine supplies 47% of sunflower oil exports worldwide, according to UK-based research firm Mintec. With Russian military forces occupying and disrupting Ukraine agricultural production and supply chains, attacking ports and blockading shipping, Ukraine sunflower oil exports and production have dwindled. And with international sanctions hitting Russia, its government has imposed an export quota of 1.5M tonnes of sunflower oil from 15 April to 31 August. It is also imposing an export quota of 700,000 tonnes of sunflower meal for the same time period and has banned sunflowerseed exports since 1 April, following a request
for this action from the Oils and Fats Union of Russia – which includes the largest sunflower oil producers – to encourage Russian planting in this growing season. Together, Ukraine and Russia deliver 60% of global sunflower oil production and more than 70% of exports, according to Mintec.
Sunflower oil prices pushed up
The war and its consequences have therefore inflated sunflower oil prices. The Russian export quota pushed European Union (EU) sunflower oil prices down 6% week-on-week to €1,973/tonne on 7 April, with traders relieved that at least some exports were guaranteed. The 7 April price was 25% under the €2,635/ tonne peak set on 10 March, two weeks after Russia invaded Ukraine. However, prices still remain high. “Trade from Ukraine remains halted due to the shutdown of ports and crushing facilities,” noted Mintec. Russian oil analysts from oilworld.ru note that trade would continue to be impeded by “continued difficulties with foreign exchange transactions against the backdrop of sanctions” and already
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04/05/2022 09:43:44
