Analysis and Studies - Products analysis
Consequences of the war for the sunflower oil industry
March 15th 2022
We all know that palm oil is fundamental in the food industry. However, palm oil prices are soaring, mostly after the Russian invasion of Ukraine. Futures prices of this good rose by more than 10% in the last period; in Indonesia, the biggest exporter of the product, they touched 18%.
Countries are looking for alternatives that can fill this gap, but they will not be able to count on Ukraine’s sunflower oil. The nation affected by the war is responsible for one third of the global production and for half of all exports of the product. However, the different players in the market will have to find alternative solutions due to the shortage of this good in Ukraine.
Why does this happened?
Main causes
The whole industry even before the invasion was fragile, and the Russian attack has arrived at the wrong moment. Palm oil buyers can no longer rely on Ukraine's sunflower oil, as shipments of the goods through the Black Sea are blocked temporarily. Take in count that shipments through sea make up about 55% of world’s exports.
Ukraine is responsible for one third of the global production of this oil and for half of all exports; it is evident that the lack of this big stake of the global market will damage all the partners involved in related import-export. In France, for example, prices of chips bags have already raised by 20-30 cents, on average.
Some data about the sunflower oil industry
As it has been said, Ukraine is the biggest exporter of sunflower oil, as it accounts for nearly half of the $7.42 billion trade in 2019. Russia is the second one, with a stake of 20%; Argentina, the Netherlands and Hungary follow.
India is the biggest importer of sunflower oil and it imports mostly from Ukraine and Russia: as the trade here stopped, India sees a shortage of the product. Experts say this is going to impact the common man.
In 2019, the top importers were: India ($1.71B), China ($869M), Netherlands ($496M), Iran ($464M), and Spain ($440M). The average tariff was 11.8%.