The price of the sunflower eating oil plummeting

The price of the sunflower eating oil plummeting

Should there be a speculative increase in prices with no economic justification, one of the ways to lower prices is a temporary suspension of customs duties on sunflower oil imports, in order to boost competition, State Secretary of the Ministry of Trade, Tourism and Telecommunications Uros Kandic told Tanjug.

The oil industry is a strategic branch of agriculture and because of that, the customs duties on the import of sunflower oil from the EU to Serbia is quite high, going up to 30 percent.

So far, an economic logic for the correction of oil prices exists, since the key input parameters, i.e., raw materials have drastically increased in price.

Kandic explained that the rise in sunflower oil prices, which continued this year as a result of events on the international stock market, are directly reflected in Serbia, due to the weaker sunflower yield of the world's largest producers, primarily Russia and Ukraine, and on the other hand, increased demand for edible oil internationally, due to the pandemic.

"The price of crude sunflower oil in the Black Sea region is currently around 1,525 dollars per ton, which is an increase of 16 percent compared to February this year, and more than twice the increase compared to the same period last year when the price of crude sunflower oil was $ 665 per ton," said Kandic.

In addition, as Kandic said when we talk about the price of sunflower, it is currently traded in Serbia for the upcoming 2021 harvest at a price of 48 dinars per kilogram without VAT, while for comparison purposes, at the end of the last year's harvest in September, the price of sunflower was 35.5 dinars per kilogram, which represents an increase of 35 percent.

The market in Serbia is well supplied and there is no fear of shortages.

Kandic said that the yield of sunflower in 2020 was around 660,000 tons, some nine percent worse than the yield in 2019, close to the multi-year average, and the export of sunflower oil is currently within acceptable limits.

The Association of Grains of Serbia, which monitors prices on world stock exchanges and the price of raw materials on the domestic market, stated that it is clear that lower prices of sunflower oil in Serbia can’t be expected until the next harvest of sunflower.

Whether the price will remain at this level or the oil will become more expensive exclusively depends on the next yield, both in our country and in the world, and some other events on the world market," the director of the Serbian Grain Association, Ms. Suncica Savovic told Tanjug.

The price of sunflower on the domestic market depends on the price on the international market because sunflower is a stock commodity with its price formed on main stock exchanges around the world.

The demand for agricultural and food products in the world increased in the year of the pandemic, and this trend continued this year on the world market, more for vegetable oils than for oilseeds," said Ms. Savovic.

As before, she stated, the prices of sunflower oil on the world market until the new kind will change exclusively depending on the supply and demand.

We can give some forecasts with certainty regarding further price movements only in September, depending on the yield of sunflower on a global level said Savovic.

She also reminded that in 2020, many large world producers, such as Ukraine, Russia, Bulgaria, Romania, Moldova, had a worse yield of sunflowers, which inevitably affected this trend of oil prices on world stock exchanges.

In the second half of March, the prices of sunflower and palm oil on the world stock exchanges reached the highest level in the past 13 years, and the prices of soybean oil in the past eight years," said Savovic.

She stated that such a drastic change in prices was caused by poor yields of palm, soybean, sunflower, and rapeseed oil in the world due to less than expected last year's production of these oilseeds and declining stocks available for trade, but also the activities of financial funds on world stock exchanges, i.e., demand for vegetable oils.

Savovic said that Serbia produces relatively low quantities of sunflower in relation to large world producers, but quite enough to cover all domestic needs with some quantities available for export.

On average, Serbia exports more than 100,000 tons of sunflower and more than 150,000 tons of oil per annum, but even so, the domestic market is always sufficiently supplied, said Savovic.

Annual yields of sunflower in the past seven years at the national level range from 2.7 to 3.2 tons per hectare, and with such yields, we expect a total of up to 700,000 tons this year as well, said Savovic.

In 2020, some 654,000 tons of sunflower were produced in Serbia, with an average yield of three tons per hectare.

Savovic states that this year, within the spring sowing, which should start in the coming days, some 200,000 and 220,000 hectares will be sown with sunflowers.

Begin August, after the harvest that takes place once a year in Serbia, our sunflower market is active for only a month or two. During that period, oil mills and exporters buy from agricultural producers all quantities and all sunflower stocks at this time are at the oil mill said Ms. Savovic.