In a recent update on the sunflower oil market, the Vesper West EU Forward Price Index for crude sunflower oil reported a significant price increase. As of 25/09/2023, the index rose to €859 | $915 per metric ton (FOB, OND contract, 6 ports) from a previous €806 | $860 per metric ton in the same period last week. Several factors could be attributed to this rise:
Ukrainian seed prices: On the domestic front, sunseed prices in Ukraine have shown a considerable increase. “CPT prices for Ukrainian sunflower seeds rose from nearly UAH 10,000 per metric ton to UAH 12,000 per metric ton,” a Ukraine-based trader reported to Vesper. Some farmers in the region, after gaining from early sales, are now holding onto their seeds in anticipation of higher market prices. The trader further pointed out that increased import prices from Bulgaria also played a role in this increase. Ukrainian crushers, as a result, have upped their prices. However, looming news on Bulgarian quotas might put a cap on this rise.
Bulgarian import restrictions: Bulgaria seems to be tightening its strings on sunflower imports from Ukraine. The Bulgarian authorities have announced that sunflower imports from Ukraine will be halted unless they fall within specific quotas. A representative stated, “We will have a conversation with the Prime Minister of Ukraine, during which I will explain that we discussed the introduction of a certain quota for Bulgaria, which will be established when we clarify its size. We will not allow imports from Ukraine in the near future,” he said after a meeting with representatives of farmers.
Tensions in Izmail: On a more severe note, Ukraine’s port infrastructure and grain storage facilities have suffered damage. The grain exporting district of Izmail underwent an overnight drone strike led by Russia, which could severely impact trade routes and exports.
Diplomatic standoff: On the international stage, tensions are rising between Russia and Ukraine. Russia’s foreign minister communicated to the UN about Ukraine’s proposed peace plan and the renewal of the Black Sea Grain deal, terming them as “not realistic”. Sergei Lavrov, the Minister of Foreign Affairs, said that the conflict would be resolved on the battlefield if Kyiv and its Western allies stick to their stance.
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