Zheng Fengtian pointed out that as demand and supply reach a new equilibrium, international grain and oil prices will gradually stabilize from the previous sharp rise and fall.
The evolution of the situation in Russia and Ukraine will affect the cultivation and harvest of sunflower seeds in Ukraine in the future.
According to local media reports, on April 1 local time, Taras vysotskiy, Deputy Minister of agriculture of Ukraine, said that Ukrainian farmers had sown about 400000 hectares of spring crops, an increase of 1 / 10 over the same period last year.
However, in an interview with the media on March 22, Roman leshchenko, Minister of agriculture of Ukraine, said that the planting area of crops in the spring of 2022 in Ukraine may be reduced by more than 1 / 2 year-on-year to about 7 million hectares. Before the escalation of the conflict, the estimated sown area was 15 million hectares. Some institutions predict that the planting area of sunflower seeds in Ukraine may decrease by 35% year-on-year in 2022, reaching the lowest level in 13 years.
Ukraine and Russia are the world’s leading producers of sunflower oil. According to the data released by trade data monitor, the top three sunflower oil exporting countries in the world in 2021 are Ukraine, Russia and Argentina. CRISIL, a rating agency, said in a report that Russia and Ukraine export about 10 million tons of sunflower oil every year, and Argentina exports about 700000 tons.
Recently, due to the geographical conflict between Russia and Ukraine and the impact of trade policies and other factors, the export of sunflower oil between Russia and Ukraine has been blocked, and the international oil price fluctuated widely at a high level under the market concern.
Chen Yanjie, oil and oil analyst of Xinhu futures, told the 21st Century Business Herald that under the background of still very tight global vegetable oil supply and demand, if the conflict between the two countries continues and the export interruption of Ukrainian sunflower oil continues, the EU and India may seek import substitutes such as palm oil and soybean oil to meet China’s demand, which may raise the price range of the whole international vegetable oil, Then support the price of vegetable oil in China through cost transmission.
“Considering various influencing factors, in the medium term, the international oil and oil prices in China are expected to remain high and fluctuate widely, which is unlikely to fall deeply.” Chen Yanjie said.
restricted export of Russian Ukrainian sunflower oil
Russia and Ukraine are the world’s major producers of sunflower seeds. In recent years, the total annual output of sunflower seeds of the two countries is about 30 million tons, accounting for about 60% of the world. The sunflower seed profits of the two countries remain in China and are exported in the form of sunflower oil. The annual export volume is nearly 10 million tons, accounting for 76% of the global sunflower oil export. Among them, Ukraine’s sunflower oil export accounts for 47% and Russia’s accounts for 29%.
A few days ago, the Russian Ministry of Agriculture said in a statement that in order to avoid China’s sunflower seed shortage and alleviate China’s price pressure, it will implement an export quota of 1.5 million tons of sunflower seed oil from April 15 to August 31; Meanwhile, the export of sunflower seeds has been temporarily banned since April 1.
In late March, Ukraine lifted export restrictions on sunflower oil. Earlier in March, Ukraine announced that the export of key Shenzhen Agricultural Products Group Co.Ltd(000061) such as sunflower oil required an export license issued by the government.
Since the escalation of the conflict on February 24, the damage of port facilities such as Odessa and mikolev in Ukraine has led to the obstruction of transportation, and some pressing and processing operations have also been restricted, which has a certain impact on the original grain trade flow and affected the Shenzhen Agricultural Products Group Co.Ltd(000061) export of sunflower oil and other products in Ukraine. In addition, the sanctions imposed by western countries also affect the willingness of trade buyers to buy Russian grain and oil crops.
Due to the uncertainty in the evolution of the situation between Russia and Ukraine, the future export prospect of sunflower oil between the two countries is also uncertain.
The sunflower seeds of Russia and Ukraine are harvested from September to October every year and exported from the first quarter to the second quarter of the next year. According to the report of the United Nations Food and Agriculture Organization (FAO), before the escalation of the conflict between Russia and Ukraine, due to the improvement of supply, Russia and Ukraine are expected to export 3.7 million tons and 6.6 million tons of sunflower seed oil respectively in 2021 / 22 (October 2021 September 2022), and the shipment volume from October 2021 to February 2022 accounts for 30% – 40%.
impact on global edible oil trade
The blocked supply of sunflower oil in Russia and Ukraine means that major sunflower oil importing countries may turn to other suppliers or other alternative oils such as soybean oil, palm oil and rapeseed oil. According to FAO, the import demand of sunflower oil from Iran and Turkey is estimated to be 5.3 million tons in February and March 2029.
Among the importing countries, India and the European Union have a large demand for sunflower oil. Among them, India’s demand for sunflower oil is 2.2-2.3 million tons / year, about 70% of the supply comes from Ukraine and about 20% from Russia. At present, India has about 3 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 00000 tons of sunflower seed oil stranded in the Black Sea port.
Chen Yanjie pointed out that the total export of sunflower seed oil from Russia and Ukraine is more than 10 million tons / year and nearly 1 million tons / month. In the short term, soybean oil, palm oil and other vegetable oils cannot fill the oil supply gap.
She explained that in terms of soybean oil, South American soybean production was reduced due to the impact of dry weather, Argentina soybean oil was squeezed and output was too small, and the international soybean oil price remained high; In terms of palm oil, Malaysia’s palm oil inventory continues to be low, and the labor shortage is difficult to alleviate for the time being. In addition, Indonesia’s palm oil export tax has been significantly increased, and the international palm oil price has not been driven by a significant decline for the time being. In terms of rapeseed oil, due to the reduction of Canadian rapeseed production and other factors, there is also limited room for rapeseed oil prices to fall before the listing of rapeseed in the new season.
“If the situation continues to be tense, the shortage of EU sunflower oil will be more obvious. The international sunflower oil price still tends to strengthen. If it continues to exceed the rapeseed oil price, it may lead to the EU to reduce the amount of rapeseed oil in biodiesel.” Chen Yanjie said.
How much impact does the export restriction of Russian Ukrainian sunflower oil have on China? Chen Yanjie pointed out that Russia and Ukraine are China’s main sources of sunflower oil imports. In 2021, China imported 887000 tons of sunflower oil from Ukraine, accounting for 70% of China’s sunflower oil imports. Although imports account for a large proportion, China’s consumption of sunflower oil is not high compared with China’s consumption of about 36 million tons of edible vegetable oil every year. Therefore, the interruption of Ukrainian sunflower oil export has a limited impact on China.
Sunflower oil is not only a small variety of oil in China, but also accounts for a low proportion of global edible oil consumption. Hu Bingbing, director of the Shenzhen Agricultural Products Group Co.Ltd(000061) trade and Policy Research Office of the Institute of rural development of the Chinese Academy of Social Sciences, told reporters that the total global supply of edible vegetable oil is about 200 million tons / year, while sunflower seed oil accounts for only about 10%. In addition, with the price boost, the global oil and oil production has continued to increase in the past two years. It can be predicted that in the future, with the tightening of monetary policy by the Federal Reserve, the easing of geographical situation and the return of trade pattern to an orderly state, the trend of International grain and oil prices will also tend to be flat.
Zheng Fengtian, director of the Institute of rural development of Renmin University of China, also believes that the impact of the geographical situation on the global sunflower oil market is temporary and the impact is narrow. On the whole, the conflict occurred before the spring sowing of crops, which left time for other producing countries to adjust the varieties planted, and all countries have corresponding reserves. Therefore, as the demand and supply reach a new balance, the international grain and oil prices will gradually stabilize from the previous sharp rise and fall.
According to the forecast planting report released by the National Bureau of Agricultural Statistics (NASS) of the U.S. Department of agriculture on March 31, American farmers are expected to plant Zhejiang Sunflower Great Health Limited Liability Company(300111) 142 million acres in 2022, an increase of 10% year-on-year. Among them, the planting area of oil sunflower reached 1.27 million mu, an increase of 8% year-on-year.
