Ukraine war to raise import price of sunflower oil

The ongoing Russia-Ukraine conflict is set to drive up the cost of essential commodities such as sunflower oil and yellow peas for India, as exports from the two countries through the Black Sea have effectively ceased. Major shipping lines have suspended trade on this crucial route. Additionally, India's basmati rice exports to Iran are expected to be severely impacted due to the US imposing economic sanctions on Iran, which accounts for nearly 17% of India's annual basmati exports.

Indian traders who often re-export the rice through the UAE may face limited vessel availability in Iran, potentially causing the trade to come to a near standstill.

Sunflower oil exports from Russia and Ukraine have plummeted, leading to a surplus at the origin and shortages in international markets. The Black Sea region, a key supplier of sunflower oil to India, has witnessed drone attacks on its ports, processing units, and shipping routes, reducing India's sunflower oil imports from 300,000 tonnes monthly to 180,000 tonnes.

Experts suggest that this disruption in the Black Sea region is transforming into a physical supply-flow problem rather than just a price issue, caused by freight constraints, higher insurance costs, and the uncertainty of vessel movement.

The concentration of supply shifting to other origins, particularly Canada, poses a significant challenge as Canada's crop is significantly smaller. If the logistics constraints persist, the consequences will not only be reflected in higher landed costs but also in the actual availability and timing of crucial food commodities for India.