By Rajendra Jadhav

MUMBAI (Reuters), – The conflict in Ukraine and Russia has fueled a demand for sunflower oil.

60 percent of the world’s sunoil production is in the Black Sea, and 76% are exported from the Black Sea. This uncertainty has led buyers to look for alternative oil sources.

According to traders and analysts, soaring palm oil prices and rising soyoil could cause new records in the near future and pressure price sensitive Asian consumers who are already feeling the pinch from spiralling fuel prices.

James Fry of LMC International, chairman, stated that “we are facing a perfect hurricane.”

Already, buyers are struggling to get replacement supplies following the ban on exports from Indonesia, top-exporter of palm oil. This year also saw a reduction in exports due to the drought which has impacted the output of soyoil, second most-produced edible oils–in South America.

Global edible oil prices stretch to record or multi-year highs on supply uncertainty – https://fingfx.thomsonreuters.com/gfx/ce/movandmawpa/GlobalVegOilsFeb2022.png

To fill the gap in supply, vegetable oil buyers had been relying on sunflower oil to replace rapeseed oil. Fears of disruption of supply have been raised by Russia’s decision to send troops into the separatist areas of Ukraine.

The loading of sunflower oil vessels from Ukraine has been delayed for at least a week, according to Sandeep Bajoria who is president of International Sunflower Oil Association.

Sunoil currently has the lowest price edible oil but customers are skeptical about its delivery. They’re moving to soyoil, and palm,” Bajoria said. He is also the chief executive officer of Sunvin Group, India’s biggest edible oil brokerages. India is the top importer of edible oils in the world.

Crude palm oil and soybean oils have been sold at record prices in India, starting March shipment, at $1,700 per tonne (includes cost insurance and freight) as compared to $1,620 for crude sunflower oil.

LITTLE CHOICE

Palm oil is usually sold at a significant discount to sunoil or soyoil. However, the price of palm oil has risen by 27.5% due to Indonesian export restrictions. This year’s increase was greater than any other competitor.

It has also slowed down purchases from India- and China-sensitive buyers who had expected prices to fall.

However, tightening inventories at key consumer hubs may mean that these buyers will soon need to replenish.

They don’t have any choice. The dealer stated that they must replenish their inventories at record-breaking high prices.

Sunoil is still a favorite choice for potential buyers, despite geopolitical tensions.

Global veg oil prices in U.S. dollars per tonne – https://fingfx.thomsonreuters.com/gfx/ce/zdvxokybapx/GlobalVegoilinUSDT.png

Sudhakar Dasai, President of Indian Vegetable Oil Producers’ Association (IVPA), stated that while sunoil supply may be disrupted temporarily, once conditions improve, then sunoil supplies will resume normal.”

The 2021/22 season could see a jump in sunflower oil exports to Ukraine from the current 5.3 million tonnes, according to Ukrainian sunoil producers’ union.

The uncertainty around Black Sea oil shipment shipments continues, but global edible oil prices will remain high unless Indonesia removes export restrictions, according to a Mumbai-based broker with a global trading company.

Only Indonesia is able to save the consumer. We can’t rely on soyoil as soybean crop size has been continuously shrinking in South America,” the dealer said.