Global economics

World commodity forecast:

Sunflowerseed oil

February 2022
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Sunflowerseed oil
Demand
EU consumption is set to recover from
dip below 5m tonnes
Russian consumption is likely to remain
below 2.2m tonnes in 2021/22
India remains the largest importer
Consumption growth in "other"
countries falls in 2020/21
World commodity forecast February 2022
1
Sunflowerseed oil
With a return to ample supplies, EIU expects sunflowerseed oil consumption to
be substantially higher in 2021/22 than in 2020/21. The start of the season has
been frustrating for consumers, with the increase in availability emerging more
slowly than expected. It is likely that the second half of the season will make
up for this slow start. As a result, our forecast for 2021/22, of 21.2m tonnes, will
be only marginally below the record level set in 2019/20. Aside from the supply-
induced blip in 2020/21, sunflowerseed oil consumption has been on a long
upward trend. We expect that 2022/23 will see a continuation of this long-term
trend.
We expect strong demand from the EU in 2021/22 to make up for the local
deficit of rapeseed oil. Continuing high prices of rapeseed oil are expected to
lead to increased use of sunflowerseed oil in both food and energy
applications. Its use in food is already rising, but the scale of the increase in
biodiesel use has been disappointing because of a lack of price competitiveness
with mineral oil. Recent falls in sunflowerseed oil prices, coupled with stronger
mineral oil prices, should stimulate additional use in this sector. We have
marginally reduced our forecast. With availability expected to continue to grow,
consumption in 2022/23 should exceed 5.5m tonnes (although the expected
increase in EU rapeseed supplies may limit this growth).
Russian sunflowerseed oil prices have been kept low by the recent imposition
of an export tax on the product. However, a slow start to the crushing season
has partially offset this and hurt consumption levels. We have again lowered
our forecast for 2021/22 to below 2.2m tonnes. Although this is higher than in
2020/21, it is a low compared with recent seasons. Increased forecasts of
availability should ensure that consumption continues to grow into the 2022/23
season, although sluggish economic growth may limit the growth rate.
Following a surge in Indian sunflowerseed imports in September, imports in
October and November were disappointing, reflecting the limits on availability
from major suppliers. We have further scaled back our forecast for a rebound in
consumption in 2021/22 to 2.4m tonnes, reflecting the limitations on availability
and the risks from the Omicron variant of the coronavirus, which is now
spreading in India. It remains to be seen whether the check to growth in
sunflowerseed oil consumption in India is anything but a short-term
phenomenon. We are hopeful that consumption will rebound in 2022/23, but
much depends on the course of sunflowerseed oil prices against other oils.
The recent removal of the 10% import duty in Turkey is expected to lead to an
increase in imports. However, much of this is likely to be re-exported as refined
oil. The domestic market is limited by high inflation and an expected recession.
We now expect Turkish consumption in 2021/22 to be similar to that in 2020/21.
Chinese purchases from Ukraine for the new season have increased but are still
considered to be below potential. Total Chinese consumption is expected to
exceed 2m tonnes. Smaller consumers in the "others" category have also been
actively buying sunflowerseed oil; lower prices are likely to raise consumption
in this category in 2021/22 and 2022/23.
www.eiu.com © The Economist Intelligence Unit Limited 2022
2 Sunflowerseed oil

Sunflowerseed oil: consumptiona

('000 tonnes unless otherwise indicated)
2018/19 2019/20 2020/21 2021/22 2022/23
EU 4,850 5,240 4,610 5,220 5,525
Russia 2,360 2,305 2,095 2,195 2,305
India 2,455 2,625 2,040 2,425 2,760
Turkey 1,130 1,195 1,235 1,230 1,320
Others 8,785 10,040 9,485 10,170 10,580
Total 19,580 21,405 19,465 21,240 22,490
% change 2.3 9.3 -9.1 9.1 5.9
a Years ending September 30th.
Sources: Oil World; US Department of Agriculture (USDA); EIU.

Supply Sunflowerseed oil production in 2021/22 will not be constrained by seed

availability as it was in 2020/21. With northern hemisphere harvests complete,
a record crop is now available for crushing. The 2021/21 crushing season got off
to a slow start, but crush rates in the major sunflowerseed oil producers have
picked up. An acceleration of crushing activity is expected for the remainder of
the season. We still expect sunflowerseed oil production to approach
22m tonnes in 2021/22—a new record. (This total would be even higher were it
not for the requirement to rebuild sunflowerseed stocks.) For 2022/23, a
number of regions are reporting concerns over dry conditions based on the
impact of climate change. However, sunflowerseed is more tolerant of dry
conditions than other oilseed crops, so we continue to expect continued
growth in the production of sunflowerseed and sunflowerseed oil.

Ukrainian crush rates were lower than
expected, despite large harvest
Crush rates in Russia are under pressure
from tight margins
Despite a large harvest, crushing activity in Ukraine has been below expect-
ations. Although there are signs of increasing activity, the rate of gain is slow as
farmers hold out for higher prices for their sunflowerseed. We do expect that
crushing activity will continue to increase, especially if there is a firm indication
of a general weakening in vegetable oil markets. We have consequently
maintained our forecast for 2021/22 sunflowerseed oil output to around 7.1m
tonnes, roughly on a par with the 2019/20 record output. Sunflowerseed remains
a profitable crop, despite the fall in prices from their peak in the middle of 2021.
Ukrainian output is expected to continue growing. Rotational considerations may
limit the area growth, but we still expect oil production to exceed 7.5m tonnes in
2022/23, assuming normal weather conditions.
The large 2021/22 Russian sunflowerseed crop was expected to stimulate
additional local crushing. However, crush margins have been under pressure,
reflecting high (and increasing) export taxes on sunflowerseed oil. This has
resulted in farmers being offered lower than expected prices for sunflowerseed.
It has been suggested that supplies will not be forthcoming until the second
quarter of 2022, given that grain prices are high and farmers are not suffering
any short-term cash shortages. Despite this, we still expect Russian
sunflowerseed oil production to exceed 6m tonnes in 2021/22. Sunflowerseed
production growth is expected to continue into 2022/23. The main concern is
the current low levels of soil moisture, which will need to be replenished
before planting. Yields were affected by dry conditions in 2021/22 and a

World commodity forecast February 2022 www.eiu.com © The Economist Intelligence Unit Limited 2022
Sunflowerseed oil 3

The EU harvested a record crop in
2021/22
Improved growing conditions indicate
better yield in Argentina
possible repeat, attributed to climate change, may inhibit the 2022/23 output
level. We assume average yields that would provide sufficient raw material for
sunflowerseed oil production to reach 6.3m tonnes.
Like Ukraine and Russia, the EU has harvested a record crop in 2021/22; we
have made a small increase in our estimate of the EU sunflower harvest. All of
the main producing countries in the EU have recorded much larger crops than
in 2020/21. Amid surging rapeseed oil prices, crushers have enjoyed strong
demand for sunflowerseed oil for both edible and energy applications. We
have made a small reduction in our forecast of full-season EU sunflowerseed
oil production, but still expect output to be close to 3.9m tonnes in 2021/22, a
new record. This high level should be maintained in 2022/23.
In Argentina, sunflowerseed planting for 2021/22 is complete, with an
expanded planted area. Growing conditions have improved and point to better
yields than in the previous season. We have maintained our estimate of 3.1m
tonnes for the 2021/22 crop. We have made a minor reduction to our forecast of
sunflowerseed oil production. Forecast output of 1.2m tonnes is in line with the
average production of the last five seasons.

Sunflowerseed oil: productiona

('000 tonnes unless otherwise indicated)
2018/19 2019/20 2020/21 2021/22 2022/23
Ukraine 6,560 7,170 5,635 7,180 7,515
Russia 5,130 5,980 5,255 6,020 6,260
EU 3,570 3,705 3,290 3,890 3,936
Argentina 1,430 1,140 1,280 1,240 1,330
Others 3,375 3,535 3,430 3,565 3,540
Total 20,065 21,530 18,890 21,895 22,581
% change 6.3 7.3 -12.3 15.9 3.1
a Years ending September 30th.
Sources: Oil World; USDA; EIU.

Stocks and prices The 2021/22 sunflowerseed oil market started with adequate oil stocks but low
sunflowerseed stocks. The large 2021/22 harvest will be sufficient to provide for
both an expansion of consumption and a rebuilding of oil and seed stocks. We
expect sunflowerseed oil stocks to end the season above 3m tonnes, a level
only previously achieved in the record 2019/20 season. However, stocks of
sunflowerseed, while increasing, will remain below recent normal levels. The
expected continuation of high production levels in 2022/23 will allow both oil
and seed stocks to return to above normal levels.

Sunflowerseed oil: supply and demand

('000 tonnes unless otherwise indicated)
2018/19 2019/20 2020/21 2021/22 2022/23
Productiona 20,065 21,530 18,890 21,895 22,581
Consumption 19,580 21,405 19,465 21,240 22,490
Balance 485 125 -575 655 91
Stocksb 2,891 3,016 2,441 3,095 3,184
Stocks ratioc 53.9 51.4 45.8 53.2 51.7
a Years ending September 30th. b World stocks at end of respective marketing year. c Stocks in
terms of days of consumption.
Source: EIU.

World commodity forecast February 2022 www.eiu.com © The Economist Intelligence Unit Limited 2022
4 Sunflowerseed oil

Sunflowerseed oil prices are expected to
continue to fall
As we suggested in our last report, sunflowerseed oil prices eased in December,
albeit by only a small amount. The persistence of high rapeseed oil prices and a
slow start to the crushing season are the most likely explanations for the small
fall. Prices are likely to show continued falls during the remainder of the
2021/22 season and into 2022/23. In the short term, this downward pressure will
be partly mitigated by the strength of rapeseed oil and palm oil values. Price
reductions are likely to be small in the first quarter of 2022, but larger falls are to
be expected in the second half of the season. The rate of decline is likely to
moderate during the 2022/23 season. By the end of the forecast period prices
will remain just above US$1,000/tonne.

Sunflowerseed oil: stocks and prices

2020 2021 2022 2023 2024
Stocksa
1 Qtr 2,954 2,729 2,768 3,140 3,220
2 Qtr 2,985 2,585 2,932 3,162 -
3 Qtr 3,016 2,441 3,095 3,184 -
4 Qtr 2,872 2,605 3,118 3,197 -
% change -1.7 -9.3 19.7 2.5 -
Pricesb
1 Qtr 765 1,442 1,394 1,170 1,078
2 Qtr 762 1,511 1,324 1,135 -
3 Qtr 886 1,339 1,256 1,103 -
4 Qtr 1,106 1,444 1,209 1,089 -
Year 880 1,434 1,296 1,124 -
% change 19.1 63.0 -9.6 -13.2 -
a Closing stocks; m tonnes. b EU, fob NW European ports; US$/tonne.
Sources: Oil World; EIU.

Sunflowerseed oil: stocks and prices

Stocks ('000 tonnes); EU, fob NW European ports (US$/tonne);
left scale right scale
4,000 2,000
3,500 1,750
3,000 1,500
2,500 1,250
2,000 1,000
1,500 750
1,000 500
500 250
0 0
2015 16 17 18 19 20 21 22 23 24
Sources: Oil World; EIU.

Editors: Sanjeeban Sarkar (analyst); Matthew Sherwood (consulting analyst)

Editorial closing date: January 13th 2022
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