Ukraine Crisis May Hurt Sunflower Oil Supplies to India
Sunflower oil supplies to India may be jeopardised due to the conflict between Russia and Ukraine. According to Indian sunflower oil producers, shipments to India are likely to be affected, leading to an increase in palm oil and soy oil prices.
As per the Union Ministry of Consumer Affairs price monitoring cell, the retail price of refined sunflower oil has risen to INR 162.79 per litre, up from INR 145.03 a year ago. The loading of sunflower oil vessels has already been delayed by at least a week, said Sandeep Bajoria, president of the International Sunflower Oil Association. He added that no shipment of sunflower oil left Ukraine in February. Sunoil is currently the cheapest edible oil, but buyers are concerned about delivery. They are shifting toward soy oil and palm oil.
Bajoria further said that Ukraine supplies 17 lakh tonnes of sunflower oil to India, Russia supplies 5 lakh tonnes, and Argentina supplies 3 lakh tonnes. India will face a severe shortage if these shipments are halted. Shipments had previously been delayed, but now there is uncertainty about the delivery itself.
Buyers have struggled to find replacement supplies after Indonesia, the world's largest exporter of palm oil, the most-produced edible oil, restricted exports this year. Besides, drought had an impact on South America's soy oil output. To fill the supply gap, buyers of vegetable oil were counting on sunflower oil, the fourth most produced oil produced after rapeseed oil. On the other hand, Russia's military offensive against Ukraine has raised concerns about supply disruption.
During the November-October 2020-2021 fiscal year, India imported 18.93 lakh tonnes of crude sunflower oil. Ukraine alone accounted for 13.97 lakh tonnes of this total. Argentina exported 2.24 lakh tonnes to India, while Russia exported 2.22 lakh tonnes.
Sudhakar Desai, president of the Indian Vegetable Oil Producers Association stated that the Indian market will be under pressure if the Russia-Ukraine crisis lasts two to three weeks because oil stocks will not be replenished. They anticipate 1.5 lakh-2 lakh tonnes of sunflower seed oil imports from Ukraine between February and March.
Ukraine and Russia sell nearly identical amounts of oil at roughly similar prices. The global price per tonne ranges between USD 1,500 and USD 1,525. He said there is enough sunflower oil in India for the next two months, but shipments from Ukraine have been delayed, and vessels have been backed up for the past 20 days. India imports approximately two lakh tonnes of sunflower seed oil per month, with occasional increases to three lakh tonnes.
The ongoing conflict between Ukraine and Russia will immediately impact the price of cooking oil in India, as the country imports 93 percent of its sunflower seed oil from these two countries. According to Commerce Ministry data, India consumes approximately 2.5 million tonnes of sunflower oil per year but only produces 50,000 tonnes and imports the rest.
Sunflower oil makes up 14 percent of all edible oil imports. After palm (8-8.5 mt), soybean (4.5 mt), and mustard/rapeseed (4.5 mt), It is the fourth most popular edible oil in the world (3 mt). Sunflower oil prices have risen from 98 pence per litre in February 2019 to 161 pence in February 2022.