Russian invasion of Ukraine has big implications for sunflower oil market

Russia and Ukraine are the biggest players in sunflower oil exports, and that means the conflict between the countries will have a big impact on the world sunflower market.

Blooming sunflowers
The U.S. sunflower market likely will be impacted by the Russian invasion of Ukraine, as both countries are major exporters of sunflower oil.
Mikkel Pates / Agweek file photo

MANDAN, N.D. — North Dakota and South Dakota are the “heartbeat” of the U.S. sunflower sector, said John Sandbakken, executive director of the National Sunflower Association. But in terms of global exports, Russia and Ukraine are the biggest players, and that means the conflict between the countries will have a big impact on the world sunflower market.

“When you look at that Black Sea region of Russia-Ukraine, you know, in the whole world, they produced about 60% of all sunflower oil,” he said. “And they export about 75%, so obviously they're really key exporters and something that really is going to affect the world by not having that oil in the market.”

The U.S., in comparison, exports only 20% of its sunflower oil, with the main markets being Canada, Mexico and Japan. Neither Russia nor Ukraine are U.S. competitors for those markets, but Sandbakken expects an impact on all global vegetable oil markets as ports are shut down in the Black Sea.

“We're not really competing in the same markets, but when you take that much oil off of the market, it's something that's going to have a ripple effect about all veg-oil markets and so it's going to have some effect on our business,” he said.

Even before Russia invaded Ukraine, sunflower prices were strong, largely because of a small 2021 crop. Prices are about $10 above the same time last year.


“So this is something that even adds on top of that,” Sandbakken said.

Those prices, combined with strong crop insurance guarantees, are pushing farmers to consider growing flowers this year. He said crop insurance prices are at $32 per hundredweight for oil sunflowers and over $40 for confection sunflowers.

But sunflowers won’t be the only crop impacted by the conflict, and Stephen Nicholson, global grain and oilseed strategist for Rabobank, said on a March 1 press call that in addition to producing 78% of the world’s sunflower oil exports on the five-year average, Russia and Ukraine also produce 29% of the world’s wheat exports, 31% of the barley, 19% of the corn, and 23% of the rapeseed, known as canola in North America, he said.

In comparison, the U.S. produced 13.3% of the world’s wheat exports last year, Nicholson said.

The wheat market has been quick to react because of realistic questions about where the wheat in Russia and Ukraine will come from to fill the global needs. Nicholson said that while neither country holds over much stock and already have shipped out much of the 2021 product, the future remains uncertain.

One thing is certain, Nicholson said: Prices will remain volatile. But he is comparing the situation to that of a drought. Like in a drought, prices will spike, and then will settle back as the markets become accustomed to the new expectations. Even after the setback, he expects prices will be higher than they began.

But how long will it last or how high will the markets go? Just like in a drought, Nicholson said the impact will remain unknown “until we get through it.”

The coming impact

A major question that remains unanswered is whether Ukrainian farmers will be able to put in a crop in 2022 as farmland becomes battlefield, Nicholson said.


“It’s a challenge putting in a crop any place in the world, let alone in the middle of a conflict,” Nicholson said.

Sandbakken has talked to people in the sunflower business in Ukraine who said that delays in shipping existing supplies will not be resolved quickly.

“What they told me was that, even if all the fighting stopped today, they still would be at least 30 days away from being able to ship anything,” he said. “And so the longer the conflict goes on, I mean, obviously it's going to just keep delaying things.”

Customers have been told that if the boats with their products are on the water, deliveries should arrive. But anything that hasn’t gone out yet is questionable.

Sandbakken said whether U.S. sunflower oil producers will see more business remains a possibility. Sunflower oil buyers likely are determining their needs right now.

“But I know that they're already starting to look for other sources,” he said.

The soy oil markets have increased as soy oil has moved into “markets that are normally some sun oil markets,” Sandbakken said. “And once once the world realizes that this is going to probably be a longer term situation, then they're going to get more active.”

Some domestic customers are becoming concerned about supplies, and Sandbakken said he advised them to let processors know their needs and start booking oil “now, before things do get out of hand, if they do.”


The timing of the conflict is difficult, because northern hemisphere countries haven’t even planted their 2022 crop and thus don’t have any supplies available.

“This couldn't have happened at probably a worse time for the oil market, because it can't recover as quickly,” he said. “So when you look at available supplies, it's going to have to all come from South America or South Africa, and I'm not certain that they can honestly fulfill that void that's going to be there by this oil not being available.”

The Rabobank press call, along with discussing impacts on grains and oilseeds, also covered energy and fertilizer availability and volatility.

Ryan Fitzmaurice, energy commodity strategist, and Samuel Taylor, farm inputs analyst, talked about the volatility in oil, natural gas and fertilizer prices and availability. Russia is a major world player in oil and refined products, and Russia and Belarus, which has aligned itself with Russia, are major world players in various fertilizer components. Much will depend, they explained, on the length of the conflict and the way supply chains realign.

Nicholson, speaking mostly about wheat availability, said the markets have a way of filling needs.

“Grain is like water,” he said. “It finds the crack. It finds its way to where it needs to go.”

Jenny Schlecht is the director of ag content for Agweek and serves as editor of Agweek, Sugarbeet Grower and BeanGrower. She lives on a farm and ranch near Medina, North Dakota, with her husband and two daughters. You can reach her at or 701-595-0425.
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