Sunflower Oil Prices Are Likely to Fall Further in Africa Amid Assured Supply from Ukraine
According to a leading, South African oil producer Southern Oil (SOILL), consumers can catch a break as cooking oil prices are projected to lower by 30 percent in the coming two months. The owner of the B-Well and African Gold oil brands, Morne Botes, commercial director for SOILL, stated that Sunflower oil prices are anticipated to decline 25 to 30 percent at a price level of USD 4.98 (R84.99) to USD 4.69 (R79.99) for 2 litres’ worth.
Adding to that, Mr. Botes stated that sunflower oil could range between USD 4.40 (R74.99) and USD 4.69 (R79.99) on promotion. There can also be an expected price dip of 12.5 percent to 15 percent for canola oil prices, bringing it to USD 5.81 (R99) for everyday prices, whereas promotional prices are likely to decline within a range of USD 4.40 (R74.99) to USD 4.69 (R79.99).
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Canola and sunflower oil supplies from Ukraine have begun to become steady following the nearly six-month-old war Russia started in Ukraine led to a price rise. The war also became a threat to 2023 harvests as it began during Ukraine’s critical March/April oilseed planting season.
During a point, the sunflower and canola oil prices rose 55 percent and 40 percent, respectively, during the span of 2 months, and a 2-litre sunflower oil bottle fetched USD 7.04 (R120). The vegetable oil produced in South Africa is not enough to meet the local demand growing at 2 percent annually. Due to this, it relies on the Black Sea region for the rest of its oil import needs. The country imports 30 percent of its demand from other regions as it only produces 800,000 MT of oil annually.
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South Africa is struggling to afford a basic food basket. There was a notable 72 percent sunflower oil processor price rise in 2022. Retailers rose their prices only by approximately 36 percent despite the increase, which indicates that they also benefited from the rise. There are concerns over suspicions of foul play by industry players trying to gain profit during the crisis. The sunflower oil price has exceeded by 72 percent in the current year, exceeding the cost of sunflower seeds which have not witnessed a price change. According to statistics, consumer inflation in the region rose to 7.8% in July.
The rising inflation in the region has led to tightening of the monetary policy by the central bank, worsening the sluggish economic conditions battling with record high unemployment during power blackouts. The bank raised interest rates by 150 basis points for the recent cycle hinting a further strictness in policies to conquer the inflation concerns.
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On the other hand, the prices of bread are rising as a result of inflation. Bread sales have risen to 33 percent, indicating that consumers are cutting down on pricier proteins to cope. As a result of the following issues there has been a civil unrest in the region causing an outburst of protests where people are taking to the streets to demand a solution.
According to the Procurement Resource, there is an expected decline in the sunflower oil prices in Africa owing to the assured supply of Canola and sunflower oil from Ukraine. Sunflower oil prices are projected to fall by 25 to 30 percent at a price level of USD 4.98 (R84.99) to USD 4.69 (R79.99) for a worth of 2 litres.