Sunflower oil shortage,, Global cooking oil, cooking oil

Sunflower oil shortage: A boon for palm oil producers, bane for consumers

The sunflower oil shortage amid the ongoing Russia-Ukraine war has sent crude palm oil prices through the roof leaving many devastated.

The geopolitical worries in the Black Sea region has a significant bearing on sunflower seed and its oil supply from the region, as both countries involved in the war are major sources for the oilseed.

India is a major importer of crude palm oil, as the country meets more than two-thirds of its edible oil needs through imports, of which palm oil accounts for more than 60 per cent.

India imports more than 2.5 million tonnes of sunflower oil, including from Russia and Ukraine.

Sunflower oil shortage

In reaction to possible supply disruption of sunflower oil, palm oil prices rallied sharply as all the edible oils track each other’s prices as they compete in the market for price realisation, and any potential supply disruption for one variant buoys the prices of others.

“The war between Ukraine and Russia shook the major supply of sunflower oil, thereby disrupting the demand and supply of the entire global edible oil (market). India is one of the largest importers of sunflower oil, importing more than 2.5 million tonnes.

“Dependence on sunflower oil from other large producers like Europe and Argentina seems to be very low as both these countries are largest domestic consumers,” said Vinod T.P., Research Analyst at Geojit Financial Services.

Sunflower oil shortage, Sunflower Oil ,Sunflower
Sunflower oil

“With regard to Argentina, due to higher prices, lower output and higher shipment cost, the move for importing sunflower oil from there is likely to be on the lower side.

“As India is diverse in culture and eating habits, people will mostly switch over to other edible oils which are available at a cheaper rate.”

Vinod expects the dependence on soybean oil and palm oil to rise.

“Expectation of higher mustard production is likely to cushion some prices (of edible oils) in the near term,” he said.

Rabi mustard is currently being harvested, and it will make its way into the markets in the next few days. Freshly harvested mustard pouring into the mandis will, to an extent, check the rising edible oil prices.

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Taking cues from sunflower shortage and rally in crude palm oil prices, the global benchmark soybean oil prices have risen more than 10 per cent since the start of the war.

Constantly falling soybean crop estimates from South American countries and Indonesia raising domestic allocation of palm oil consumption are likely to support crude palm oil prices, said brokerage house Kotak Securities.

Reportedly, the Indonesian government recently mandated a minimum proportion of production to be sold locally in a bid to curtail a dramatic rise in domestic cooking oil prices. Indonesia is the largest producer of oil palm, followed by Malaysia.

Despite several attempts made by the Centre to cool off edible oil prices, nothing much has happened.

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In mid-2021, the Centre removed import restrictions on refined bleached deodorised palm oil, refined bleached deodorised palm olein, and another variant (palm oil and its fractions, whether or not refined, but not chemically modified) till December 31, 2021, which have now been extended till the end of 2022.

Besides, in late 2021, the Centre reduced the basic Customs duty on refined palm oil from 17.5 per cent to 12.5 per cent till March 2022.

Dorab E. Mistry, Director of Godrej International, said recently at an event that the high energy prices may prolong because of which 2022 may be a year of stagflation.

World economic slowdown is expected to weigh on commodity prices, including palm oil, Mistry said.

Further, stagflation may lead to recession. As a result, in the second half of 2022, a dramatic fall in commodity prices, including those of energy, are likely as demand may fall sharply, he said.

The Choice Press
thechoicepress.com is an online news portal that seeks to project what the gallant small-scale farmers in Africa are doing. We basically report on everything that has to do with agriculture and agribusiness, especially in Ghana.
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