Turkey's sunflower oil (SFO) import pace has remained strong this month, despite earlier expectations and the nation's ongoing sunflower seed (SFS) harvest, but the recent increase in SFO import duties and potential disruptions to the Black Sea grain corridor could weigh on receipts in the coming months. Meanwhile, the nation's growing interest in SFO re-exports could provide some support to imports.
A combined 43,000t of Ukrainian SFO was delivered to Turkey earlier this month, suggesting that the nation's imports of product already rose to a new September high in recent years, just marginally below the 45,000t received in September 2012. Including potential deliveries from other suppliers in September — for which data are not yet available — or assuming additional shipments from Ukraine later this month, Turkey's SFO imports could hit a record for September this year.
With 70,500t imported globally in July and a further 23,500t from Ukraine in August, Turkey's SFO receipts so far in the 2022-23 marketing year (July-June) already hit at least 137,000t. This would be up from 123,200t received in July-September last year and the second-highest volume for the period in the past 10 years.
The strong pace of SFO imports contradicts earlier expectations, as Turkey was previously anticipated to reduce its receipts this season to crush more imported and domestic SFS. Turkish 2022-23 SFO imports are projected to fall to 800,000t from the 1.28mn t estimated for 2021-22, according to the US Department of Agriculture (USDA). At the same time, the USDA pegs domestic SFS production and imports in 2022-23 at multi-year highs of 1.9mn t and 1.25mn t, respectively, with total crush volumes due to reach a record 2.8mn t.
Turkey's SFS imports were strong in July at 119,000t but just 11,300t were delivered from Ukraine's Black Sea ports in August-September — the nation's primary supplier of crop.
But strong SFO imports were in line with Turkey's extended 0pc import duty policy for SFO arrivals at the start of the season. The duty was lifted to 10pc only last week, contrasting with long-term practices as the government usually raises import taxes ahead or at the start of the SFS harvest in the summer to support domestic production.
The tax could prompt buyers to step down SFO receipts, as import costs for Turkey have already soared in recent weeks amid a weakening lira against the US dollar. At the same time, domestic SFS prices have fallen to around 11,500 lira/t ($625/t) from peaks of TL16,000/t in June, which could prompt Turkish crushers to opt for domestic crop.
And uncertainties around the renewal of Ukraine's grain corridor could further weigh on Turkey's SFO imports, with the former stepping up shipments in the summer and overtaking Russia as the primary supplier of Turkey. In case of a full return to river and land shipments only, Ukrainian exporters could give priority to corn in a bid to liquidate ample old-crop stocks of crop and amid the new-crop harvest.
That said, Turkish buyers could turn to Russia for SFO imports, with the latter's export tax on product due to fall to zero in October from 8,621.30 roubles/t ($149.80/t) in September. The reduction is a result of Russia's calculation scheme for the floating export duty and could boost the nation's slowing SFO shipment pace over the next few months.
Turkey's rising SFO re-export business could also provide support to imports despite higher prices. Since the start of the war in Ukraine, Turkey has stepped up SFO shipments both to its neighbours and new destinations, despite government-imposed restrictions on exports of SFO produced in the country, implying they could be re-exports instead. Turkey exported nearly 50,000t of SFO to India in April-July alone, having shipped a mere 2,000t to the destination over the nine previous years.
