Throughout the first half of autumn, Europe experienced unusually warm temperatures. In the northern half, mild conditions, sufficient soil moisture, and abundant sunshine favoured the growth, ripening, and harvesting of summer crops the MARS report states. However, the situation was less favourable in the south, where temperatures soared to unusually high levels. In significant parts of Bulgaria, Hungary, Romania, and Greece, rainfall hit record lows. The combination of scorching temperatures and insufficient rainfall had a detrimental impact on grain maize and sunflower yields in these regions, prompting the downward revisions of 2 and 5% respectively as compared to September according to the MARS report.
The EU's revision of yield forecasts highlights the sensitivity of European agriculture to weather variations. While some regions benefited from favourable conditions, others faced severe challenges due to high temperatures and reduced rainfall.
Of particular concern is the significant decrease in sunflower yields in the EU, dropping from 2.20 tonnes per hectare in the September report to 2.10 tonnes per hectare in October. This decline is expected to impact the EU sunflower seed crop production, although market players anticipate a relatively large crop of around 10 million metric tonnes, which is approximately 600,000 metric tonnes more than last year.
In the context of the sunflower market, the price of sunflower oil (Mintec Code: SFOR) declined slightly over the week. This is attributed to EU buyers taking a 'wait-and-see' approach, as they have already secured their requirements until 2024. Meanwhile, in Ukraine's deep-sea ports, there has been an increase in trade activity, but oilseeds demand lags behind that of grains. Challenges, such as long wait times, documentation issues, and registration problems in Ukraine's Danube ports, have contributed to slowing down trade significantly.
Shifting attention to supply, concerns are growing among market players that prices may face continued downward pressure. This is due to accelerated sunflower seed harvests in Ukraine and Russia, alongside reports of good yields. According to estimates received by Mintec, Ukrainian production stands at 14.5 million metric tonnes, while Russian production is estimated to be in the range of 17 to 18 million metric tonnes. These estimates point to an abundant supply of sunflower seed and oil in the market, creating an overall surplus.
Adding to the uncertainty, Ukrainian ports continue to be subject to drone and shelling attacks, leaving market players unsure about the level of demand for Ukrainian supplies. This uncertainty may prompt players to offer lower prices in a bid to stimulate demand in the face of these challenges.
Source: Mintec