The War in Ukraine Strongly Affects India’s Sunflower Oil Consumption
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India’s Sunflower Oil Domestic Consumption Will Increase by 260 Kmt YoY in the MY 2022/2023
In the MY 2020/2021, India’s Sunflower Oil domestic Consumption surged to 2.3 Mmt, exceeding production by 2.2 Mmt and leading imports to reach 1.33 Mmt. However, in the MY 2021/2022, the war in Ukraine disrupted the Sunflower Oil supply chain, leading to a tight supply situation. In addition, production decreased by 2 kmt YoY to 60 kmt. As a result, India’s domestic consumption of Sunflower Oil fell by 0.7 Mmt YoY (-30% YoY). Looking ahead to the MY 2022/2023, the USDA estimated that domestic consumption would increase by 0.26 Mmt YoY to 1.86 Mmt, while production will only increase by 4 kmt YoY. Thus, how much Sunflower Oil did India import at the beginning of the MY 2022/2023?
Figure 1: India Sunflower Oil Production and Domestic Consumption (MY 2019/2020 – 2022/2023)
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How Did the War in Ukraine Affect India’s Sunflower Oil Imports?
In the MY 2021/2022, India’s Sunflower Oil production declined by 2 kmt YoY, partially leading imports to rise to 1.46 Mmt, 0.13 Mmt higher YoY. For the MY 2022/2023, the USDA estimated a 0.26 Mmt YoY increase in India’s Sunflower Oil domestic consumption. However, between Oct 2022 and Feb 2023, India’s Sunflower Oil imports decreased by 17 kmt YoY. This import decrease is due, in part, to rising freight and insurance costs from the Black Sea 8. With the ongoing war in Ukraine which creates supply constraints and uncertainties for the remainder of the MY 2022/2023, India may need to look at alternative sources for its Sunflower Oil imports. Which countries could serve as alternative origins for India’s Sunflower Oil imports?
Figure 2: India Sunflower Oil Imports (MY 2020/2021 – 2022/2023)
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India Turns To Argentinian Sunflower Oil in March 2023
Due to the war in Ukraine that began late Feb 2022, India’s Sunflower Oil imports from Ukraine decreased by 289 kmt YoY in the MY 2021/2022. Similarly, at the start of MY 2022/2023, Sunflower Oil imports from Ukraine decreased by 394 kmt YoY between Oct 2022 and Feb 2023, while imports from Bulgaria increased by 174 kmt and from Russia by 125 kmt. Additionally, India’s Sunflower Oil imports increased by 21 kmt YoY from Argentina to 82 kmt, so far in March 2023. How did Argentina, Russia and Bulgaria Sunflower Oil FOB prices compare at the beginning of the MY 2022/2023?
Figure 3: India’s Soybean Oil Import Origins (Jan and Feb 2023)
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Read also: India Leads Argentina’s Sunseed Oil Export Market
Sunflower Oil FOB Prices Continue to Decline
In the MY 2021/2022, Sunflower Oil prices reached their highest values in March 2022. Bulgarian FOB price reached USD 2534/mt, followed by Argentina with USD 2131/mt and Russia with USD 2063/mt. Later on, prices decreased to their minimum values in Sep 2022, with a USD 1338/mt FOB price for Bulgaria, USD 1285/mt for Argentina and USD 1185/mt for Russia. At the beginning of the MY 2022/2023, Sunflower Oil FOB prices continued decreasing YoY, mainly for Argentina and Bulgaria, for which prices fell to USD 1086/mt and USD 1058/mt in Feb 2023, USD 357 /mt and USD 318/mt lower YoY. With Sunflower Oil prices remaining at their lowest, India’s imports might increase YoY for the rest of the MY 2022/2023.
Figure 4: Argentina, Bulgaria, and Russia Sunflower Oil FOB Prices (Oct 2021 – Feb 2023)
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In a Nutshell
Ukraine is the leading exporter of Sunflower Oil to the Indian market. However, with the war in Ukraine starting in late Feb 2022, India’s Sunflower Oil imports from Ukraine decreased YoY in the MY 2021/2022, while imports from Bulgaria and Russia increased.
For the MY 2022/2023, the USDA estimated India’s Sunflower Oil domestic consumption to increase by 260 kmt YoY. However, India’s Sunflower Oil imports decreased YoY between Oct 2022 and Feb 2023 due to the remaining supply constraints from the Ukraine war.
Therefore, India needs to consider alternative sources for Sunflower Oil imports, such as Bulgaria and Argentina, whose Sunflower Oil FOB prices continued to decrease YoY in the MY 2022/2023.
