Old crop Ukrainian sunoil prices to slide to $720/mt: Sunvin
Prices of sunoil in Ukraine, the world’s leading exporter, are set to ease to $720/mt in the coming weeks after hitting a 12-month high this month as the steep premium over other vegoils drives buyers to seek alternatives, a Mumbai-based vegetable oil importer said.
“Sunflower oil prices have shown a strong rally this year, however, old crop prices are near a resistance area of $755-760 and are expected to correct lower towards $730-720 level in coming weeks,” Sunvin Group said in their special research report published Friday.
The report was published as part of the Group's presentation at the International Sunflower Seed and Oil Conference 2019 in Mumbai.
Old crop volumes, for August loading, hit a season high on Thursday at $747/mt FOB Chornomorsk, a price not seen since July 2018 after a record sunseed crop last September and bearish global vegoil prices pushed prices to multi-year lows.
Yet the market began climbing at the start of May as farmers withheld their seeds, pulling crusher’s input costs steeply up and forcing oil prices higher, before a smaller than expected 2019 sunseed crop further fuelled support.
Sunvin’s price forecast is conservative, the group’s Research Head Anilkumar Bagani told Agricensus, adding that “it is currently difficult to forecast the depth of the fall… given the steep rise and pattern of the [price] chart”.
Indian vegoil demand – which has shown a rise for sunoil volumes in recent seasons – started to shift away from sunoil this season primarily towards palm oils “due to the wider price premium” of the vegoil, Sunvin said.
“At such premium importers don't want it,” an India-based source said.
Sunoil volumes on a CIF India basis were offered Friday at $797.5/mt for August shipment, at a steep premium to soyoil and crude palm oil which were offered at $678/mt and $490/mt CFR India, respectively.
That $110/mt premium for sunoil over soyoil is set to narrow to the $40-50/mt range in “the coming months” giving the steep inverse between old crop and new crop prices for sunoil, Sunvin Group said.
Sunoil’s premium over soyoil for new crop volumes was quoted Friday at $70/mt, with shipment for the final quarter of the year offered at $750/mt CIF.
“Q4 values shall come down, it is relative to the movement in soybean oil,” Bagani said.
“By Q4, volumes will start to ship, and farmers will have done the selling of their old sunseed crop to keep storages available for new rapeseed and wheat crops,” Bagani continued.