Sunflower Oil Prices Explained

Sunflower oil prices remained elevated across the market as the global supply chain suffered the present war in Ukraine (the biggest exporter). Also, the cautious farmers from Eastern Europe, Ukraine, and Russia contributed to the narrow global supply as they were hesitant to sell their raw materials to crushers.

Moreover, the unavailability of high-quality sunflower seeds and the high cost of palm oil exports will further fuel its fluctuating prices.  As a result, consumers and food manufacturers are advised to brace for higher sunflower prices in the near term and start exploring alternatives to this oil to avoid increased production costs.

Why are sunflower oil prices fluctuating?

1. Russia-Ukraine War

Russia and Ukraine are the top sunflower oil producers in the world. For 10 years, Ukraine exported 45%-55% of sunflower oil globally and Russia had a share of 15%-20% of the production until the conflict began.

As a result, the current war between these countries affected the global vegetable oil market. Sunflower oil prices skyrocketed more than 40% since the day of the invasion which caused other vegetable oil prices to soar.

Experts believe this price trend will continue even longer depending on the two countries’ war agreement.

2. Climate Change

Extreme weather conditions such as heat waves, heavy downpours, tropical cyclones, and floods directly affect sunflower oil production, controlling its availability and prices.

Ukraine’s summer drought affected 94% of its sunflower seed production. While production increased due to improved rainfall patterns, it isn’t enough to cover the rising demand for this commodity, leading to a spike in sunflower oil prices.

3. Competition from Other Vegetable Oils

Although 2/3 of oil production accounts for sunflower, its price is still vulnerable to other vegetable oils. Soybean, canola, and palm are the top competitors of its market. Thus, price changes in these oils can impact their demand and price.

4. Biofuels

As part of sustainable development goals, some countries are pushing biofuels as a substitute for fossil fuels. 

According to Rabobank, 15% of vegetable oil demand comes from biofuel. However, the shortage of sunflower oil production led to a tighter need to fill in the gap. Thus, this created a domino effect on other vegetable oils and their prices.

Which variables impact the price of sunflower oil?

• Russia-Ukraine War
• Climate Change
• Competition from other Vegetable Oils
• Biofuels
• Exchange Rates
• Consumer Preferences and Trends

Where does sunflower oil come from?

Sunflower oil ranks fifth in production among edible vegetable oils and is extracted from sunflower seeds.

Historical records show sunflowers originated from the South American culture, preferably the Mayans. Additionally, they considered it a primary source of food. The Mayans believed it had medicinal properties and was used as a snake bite remedy.

Furthermore, sunflower cultivation spread in Europe in the 16th century thanks to the European explorers who brought sunflower seeds to the West. The Russians began growing sunflower as a commercial crop in the early 1880s, making them the top exporters until today.

Here is the detailed processing technique of sunflower oil:

1. Cleaning the Seed – The harvested sunflower seeds are passed over magnets to remove metal traces. Additionally, other impurities are removed by cleaning the sieve.

2. De-hulling – The outer covering (hulls) is removed to obtain pure seeds. This process is called shelling.

3. Grinding the Seeds – Next, the de-hulled seeds are ground to break down the seed tissue and increase the surface area for oil extraction.

4. Pressing – The sunflower seeds are pressed using an oil-pressing machine.

5. Extraction of the Additional Oil – After pressing, the remaining seed material (cake) still contains significant oil. This oil is extracted using a solvent, typically hexane.

6. Removal of Solvent Traces – The oil-solvent mixture is heated to evaporate and recover the solvent.

7. Oil Refining and Processing – The sunflower oil is further refined to remove impurities, color, and odor, to achieve a clear, light, and high-quality oil.

8. Packing the Sunflower Oil – Finally, the refined oil is packed and ready for sale.

The cost of sunflower oil extraction machines can vary depending on the capacity and efficiency of the machine. Presently, the top 5 sunflower oil-producing countries are Ukraine, Russia, Argentina, Turkey, and France. The United States is also a significant sunflower oil producer. 

What is the future price of sunflower oil?

These are the top price movers of sunflower oil in 2030:

Supply and demand – The global supply and demand for sunflower oil will be the biggest factor influencing sunflower oil prices in 2030. Its global supply remains volatile until the war between Ukraine and Russia is settled. Also, uncertain weather systems brought by climate change exacerbate the countries’ output. In addition, the soaring vegetable oil prices support its value increase. Moreover, the rising consumption of sunflower oil in Europe is another price mover of sunflower oil.

Crude oil prices – Sunflower oil prices move along with crude oil prices as sunflower oil is often used as a substitute for diesel fuel. The seed’s capacity to produce nearly 600 pounds of oil per acre drives the inclination toward sunflower seeds for biofuel production. And with countries ramping up their biofuel production, the demand for this commodity increases, translating to elevated sunflower oil prices.

Overall, the estimated sunflower oil price in 2030 will be $920.75 per ton.