European Sunflower-Crop Outlook Cut by Oil World on Summer Heat

Sunflower production in the European Union, Russia and Ukraine will be lower than previously expected after heat and dry weather in June and July damaged the oilseed crop, Oil World wrote.

The three producers will harvest 24.8 million metric tons of sunflower seed this year, the Hamburg-based researcher wrote in an e-mailed report, cutting its July forecast by 660,000 tons. That compares with a 28.1 million-ton crop in 2011.

Sunflower seed is the world’s fourth-biggest oilseed crop after soybeans, rapeseed and cotton seed, accounting for about 9 percent of global oilseed output last year, Oil World data show. Sunflower-oil prices may rise relative to other cooking oils due to the production drop, the researcher wrote.

“The volumes lost in sunflower seed and oil are likely to be sufficiently large to have an impact on the global vegetable- oil market,” Oil World wrote. “The losses come on top of the prospective sharp decline in world production of soya oil in the next six months.”

EU production of sunflower seed will drop to 7.22 million tons from 8.2 million tons in 2011 on smaller crops in France, Hungary, Spain and Romania, according to Oil World, which previously expected a harvest of 7.87 million tons.

Russia, Ukraine

Farmers in Russia will harvest 8 million tons of the oilseed, down from 9.5 million tons last year and 400,000 tons less than last month’s outlook, the report showed. Ukraine’s sunflower-seed crop is seen falling to 8.6 million tons from 9.3 million tons, with the outlook cut by 600,000 tons.

The outlook for Northern Hemisphere sunflower-seed production is “declining at an alarming rate,” Oil World wrote. “Production prospects have considerably deteriorated as a result of unfavorably hot and dry conditions.”

Importers in North Africa and India can still buy sunflower oil from the Black Sea region at competitive prices compared to soybean oil from Argentina due to more attractive freight costs, according to Oil World.

While sunflowers are more drought-resistant than corn, weather conditions in coming weeks will be “critical” and yields may deteriorate further if there is no adequate rain “soon,” Oil World wrote.

The production slide “will enforce a reduction in crushings and strengthen the prices of sun seed, oil and meal in the next months, spilling over also to rapeseed and products,” the researcher wrote. “We are now in a transition period. We would not be surprised if sun oil widens its price premiums relative to soya oil, rape oil and palm oil.”

EU imports of sunflower seed are predicted to be 300,000 to 350,000 tons in the 2012-13 crop year compared with 322,000 tons in the previous season, according to Oil World. Turkey will import 650,000 to 750,000 tons, compared with 900,000 tons in 2011-12, the researcher forecast.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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