The prices of sunflower oil and wheat have been witnessing an increase in India as a result of recent developments in the global commodity market. Russia’s decision to suspend a year-old deal that allowed the export of commodities from Ukraine through the Black Sea has impacted the shipments of sunflower oil to India. Moreover, Russia’s bombing of the Ukrainian grain port of Odesa has led to the destruction of over 60,000 tonnes of grain, exacerbating the situation.
Sunflower oil prices have surged by almost 8% since the suspension of the deal. India relies on imports of sunflower and soybean oils to meet its domestic demand. In addition to the Russian export deal suspension, dry weather conditions in the US, a major soybean producer, and exporter have contributed to a 5% increase in soyabean oil prices in the last week.
The current oil year, spanning from October 2022 to November 2023, is expected to witness a rise in sunflower oil demand to 3 million tonnes compared to 2.3 million tonnes last year, primarily due to increased oil consumption after cooking oil prices fell from the previous year. However, Russia’s actions have presented challenges for consumer staple companies in India, as imported sunflower oil prices have risen significantly.
Global wheat prices have also seen a sharp increase following Russia’s withdrawal from the Black Sea grain deal. On the European stock exchange, wheat prices surged nearly 9% in a single day to $284 per tonne. Similarly, US wheat futures experienced an 8.5% jump—the highest daily rise since the war between Russia and Ukraine began in February of the previous year. Experts predict a further 15% rise in wheat prices over the next three to four months.
Moreover, the dry weather conditions in the US are a cause for concern for the Indian edible oil industry. The US Department of Agriculture’s June 30 acreage report indicates a 4.6% decrease in soybean acreage compared to the previous year, down to 83.5 million acres. These factors collectively contribute to the current escalation in sunflower oil and wheat prices in India.