The conflict between Russia and Ukraine is likely to impact exports of sunflower oil (SFO) to the EU from the region, according to market participants, which could have a knock-on effect on prices of alternative vegetable oils such as rapeseed oil (RSO).
The closures of ports in the Azov Sea and Ukrainian Black Sea following Russia's attack on Ukraine will primarily impact exports of SFO, which is typically exported evenly throughout the marketing year.
In the 2020-21 crop year, nearly half of the total 1.5mn t of SFO imports into the EU from Ukraine were delivered in the second half of the season, while in 2019-20, it was 55pc of overall imports.
Market participants estimate that 500,000-700,000t of SFO for the European market could be affected by trade suspensions in the current season.
Ukraine supplied the EU with an average of 1.63mn t/yr of sunflower oil between 2016-17 and 2020-21 and has supplied the EU with 809,300t of sunflower oil so far for the 2021-22 marketing year.
In contrast, the majority of rapeseed and rapeseed oil (RSO) imports from the Black Sea region are delivered between July and December each marketing year, meaning the physical impact of the conflict on biodiesel feedstock RSO is minimal. In the previous two marketing years, only 22pc of total RSO imports to the bloc were delivered in the second half of the crop year.
But RSO prices are likely to be impacted by changes in the wider vegetable oil complex caused by the situation. The May Euronext contract opened at €785/t ($875/t) today, up by €44.75/t on the session, while prompt fob Dutch mill RSO prices gained €85/t during 21-23 February, hitting an almost five-week high on 23 February.
Supply concerns have spurred liquidity in the RSO market, with strong demand for old and new crop positions reported throughout the week, while several sellers of new crop RSO withdrew from the market early in the session today, market participants said.
