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Trade4go
Apr 11th, 2025
Original content
European producers and exporters are optimistic following Brazil's decision to abolish import duties on sunflower oil, olive oil, and several other products. This move is expected to boost the market share of European olive oil, which previously accounted for 9% of Brazil's imports. With the elimination of tariffs on sunflower oil, pasta, rice, and other goods, European countries, particularly Spain, Portugal, and Italy, are set to increase their exports to Brazil. Over the past five years, Brazil's consumption of olive oil has grown significantly, and analysts anticipate further increases with the removal of duties. This policy shift aligns with Brazil's free trade agreement with the European Union (EU), promising expanded market opportunities for both regions.
Russia's share in global sunflower oil trade is expected to increase to 42% by the end of the 2024/25 season, up from 38% in 2023/24. Sunflower oil remains Russia's primary export, accounting for 74% of all vegetable oil exports. In 2024, Russia exported 5.9 million metric tons (mmt), with India and China as major buyers. However, exports are projected to slightly decrease to 5.6 mmt in 2025 due to logistical challenges. Russia also holds a strong position in the sunflower meal market, with its global share expected to drop from 28% to 25%, and deliveries decreasing from 2.9 mmt to 2.3 mmt.
The oil and fat industry is largely driven by exports, with 78% of vegetable oils and 29% of meals going abroad. The Federal State Budgetary Institution (Agroexport), a federal center responsible for promoting and supporting exports, highlighted the potential for growth in new markets, particularly in the Middle East and Africa, as sunflower oil becomes more competitively priced compared to palm and soybean oils. Additionally, there is a push to expand bottled sunflower oil exports, particularly to regions where Türkiye has traditionally dominated.
Sunflower production in Russia is facing challenges due to export duties that reduce profitability. The acting director of the Oil-and-Fat Union of Russia suggests that returning to zero export duties could improve the profitability and dynamics of sunflower production. However, he emphasizes that the key factor is not just the removal of duties, but the margin that sunflower seed producers can sustain. Despite recent increases in profitability, with experts projecting a 60% rise in the 2024 season, the high costs of production and loans continue to limit the crop's investment appeal, with profit margins remaining under 50%. The introduction of flexible export duties in 2021 has contributed to a slowdown in sunflower production growth compared to crops like rapeseed and soybeans.
In Mar-25, Ukraine's agricultural exports increased by 9.8% month-on-month (MoM), reaching 5.4 mmt. Sunflower oil exports were significant, accounting for 89% of total vegetable oil exports, with a 29% growth compared to the previous month. Oilseed exports, including sunflower, soybeans, and rapeseed, rose by 4%, while oil cakes from sunflower and soybean extraction saw an 11% increase. These exports reflect a positive trend in Ukraine's agricultural sector, driven by stronger sunflower oil shipments.
Russia's sunflower oil prices rose to USD 1.13 per kilogram (kg) in W14, reflecting a 1.80% week-on-week (WoW) increase and a 34.52% year-on-year (YoY) rise. The price surge is primarily driven by robust demand from major importers, such as India and Türkiye, coupled with supply constraints due to adverse weather conditions impacting both domestic and global production. This upward price trend is likely to continue if demand remains strong and production challenges persist. Consequently, future prices could stay elevated, influencing global sunflower oil markets and potentially increasing competition among importing countries.
In W14, Ukraine's sunflower oil remained stable with no weekly changes at USD 1.15/kg but increased by 35.29% YoY due to supply shortages and reduced processing. However, the ongoing decline in oil prices may lead to a potential decrease in sunflower oil prices if the downward trend in neighboring oil markets persists. The commodity market is responding to global economic concerns, with oil prices falling 7% amid expectations of a recession. The release of increased crude oil production from the Organization of the Petroleum Exporting Countries (OPEC+) and weaker-than-expected United States (US) economic data further pressured oil markets. Sunflower oil, along with other vegetable oils, has seen a slight drop in quotes, closely following movements in crude oil prices.
Argentina's sunflower oil prices rose to USD 1.10/kg in W14, marking a 1.85% increase WoW and a 25% YoY rise from USD 0.88/kg. This price surge is influenced by a combination of factors, including strong demand, particularly driven by international buyers, and a unique freight bonus structure in Argentina. The freight differential is necessary due to the geographical separation of sunflower production areas and oil processing plants, which adds additional costs to the overall price.
In the 2024/25 cycle, Argentina’s sunflower oil industry is projected to process 4.0 mmt, 6.0% higher than the previous season, with a global supply shortage, particularly in Ukraine and the EU, further increasing demand for Argentine oil. This tight global balance is expected to support higher sunflower oil prices, as Argentina's production, particularly in the Southern region, outpaces local consumption needs, creating a surplus that will be processed and exported. Given these dynamics, future sunflower oil prices could remain elevated due to strong domestic processing capacity and rising global demand.
With Brazil abolishing tariffs on sunflower oil, European producers should leverage this opportunity to increase exports to Brazil and target other emerging markets in Latin America and Africa. Given the expected growth in Brazilian olive oil consumption, sunflower oil demand is likely to follow a similar upward trend. Producers should also identify and build relationships with countries in Africa, where sunflower oil demand is rising due to its competitive pricing compared to palm oil.
With sunflower oil prices increasing in key markets like Russia, Ukraine, and Argentina, exporters should consider strategic stockpiling during periods of lower prices to manage future price volatility. By employing flexible pricing models, which adjust based on market fluctuations, exporters can maintain competitiveness while benefiting from higher price points during times of supply shortages. This strategy will help manage both supply chain risks and fluctuating global demand dynamics.
Sources: Tridge, Grain Trade, Agro Investor, Ukr AgroConsult, Bichos de Campo
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