War ups cost of edible oils

Not only sunflower oil, but all edible oils will cost more due to the war in Ukraine, which will now make a product that was already getting expensive due to the imbalance of supply and demand even more costly.

Ukraine is the largest producer of sunflower oil, producing 30% of global supply, 61% of sunflower meal and 50% of sunflower oil. Russia is the second largest producer, producing 27% of global supply, 20% of sunflower meal exports and 28% of sunflower oil exports.

With both countries unable to export, prices will rise, but Morne Botes, commercial director of Southern Oil, said it was important not to look at sunflower oil in isolation, as Russia also exports canola and the whole oil complex – canola, soya, palm and sunflower oil – would be affected.

All these edible oils can act as replacements for each other in the market, depending on price and availability, he said.

South Africa only produces about 45% of its total edible oil and fat demand.

The SA oil and fat demand was 1.7 million metric tons in 2020, of which 800 000 metric tons was produced locally.

Dr Erhard Briedenhann, chair of the oilseeds advisory committee, said SA imported an average of 160 000 tons of sunflower oil per year.

Botes added that the whole oil complex was trading at a slight premium already due to droughts in North and South America, along with exports being limited in Indonesia and labour issues in Malaysia affecting palm oil production due to Covid.

“The outlook for 2022-23 was that pricing was going to start decreasing as new season crops were harvested. “However, the war has removed the potential discounts from the market.”

The price of sunflower oil increased by 40-50% in the short term but was slowly rectifying.