Veggie oil prices soar amid Russia-Ukraine conflict

The spike in vegetable oil prices due to the Russia-Ukraine conflict does not bode well for farmers and consumers.

According to Grain SA’s recent Oilseed Market Commentary report, the price of sunflower oil in mid-March was 74% higher month-on-month (m/m) and 48% higher year-on-year (y/y) at US$2 450/t (about R36 400/t). The price of canola oil gained 23% m/m and 56% y/y to reach US$954/t (R14 700/t).

The sunflower oil price hit a record in Europe, double that of the US price, and was approaching that of olive oil in some European countries due to “a lack of alternatives”, the report stated.

Dr Erhard Briedenhann, chairperson of the Oilseeds Advisory Committee, said South African oilseed prices were lagging behind global prices, but would catch up.

He said for farmers, the higher oilseed prices might, to some extent, cover the strong escalation in fuel, fertiliser and other input costs, some of which had more than doubled over the past year.

However, consumers, already cash-strapped due to the country’s weak economy, would struggle to pay more for vegetable oils. This, in turn, would negatively affect sales.

The Oxford Freshmarket group in KwaZulu-Natal had reportedly started limiting the purchase of 5ℓ bottles of cooking oil to four per customer in an attempt to prevent panic buying.

Briedenhann said vegetable oil shortages had also led to an increase in oilseed and oilcake prices, which in turn would further drive up meat production costs, and ultimately meat prices.

He added that sunflower production in the Ukraine was already estimated to be down by 30%, and the outlook was worsening with each passing month. But the situation should improve “once Russia and Ukraine reached an agreement”. Together, Russia and Ukraine accounted for approximately 75% of global sunflower oil exports.

Nick Wilkinson, chairperson of SA Olive, said that while the shortage of edible oils had not affected olive oil prices directly, it could potentially reduce the difference between the prices of olive and other edible oils, which might support olive oil sales.

However, international logistical challenges were driving up olive oil production costs, which would lead to an increase of at least 10% in olive oil prices.