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2022-04-07

Sunflower oil is up 55%, and canola 40%, in two months – and worse is still to come

In just two months, the price of sunflower oil has surged 55% ,and canola oil by 40%, though the increases will only start to reflect on retailer’s shelves in the next 30 days.


Ntando Thukwana | Business Insider SA

Consumers can expect oil to be priced between R99.99 to R119.99 for 2-litre’s worth, Morne Botes, commercial director for SOILL, which owns the B-Well and African Gold oil brands, told Business Insider South Africa.

Botes said that the increases are currently being managed by producers, manufacturers, and retailers and will be phased in slowly to prevent panic buying and to sell the available stock at a fair price.

“The increases are coming… Some pricing might already have changed, but the full change in price is not visible yet,” Botes said.

The Russian invasion of Ukraine sent prices of several essential commodities soaring, including edible oils such as sunflower oil – which was already in short supply over the last few years after poor harvests of sunflower, palm, soya, and canola in crucial regions of the world.

The war also erupted during Ukraine’s critical March/April planting season, which bodes poorly for prices going into 2023.

“The risk is also not just on edible oil for consumption that we purchase in store, oil is an input in most of your favourite products you buy in store (i.e., margarine, sauces, crumbed products, etc.), so all these products prices are affected as well,” Botes said.

“Prices for the next six months at least will remain at these elevated levels and depending on the European canola and sunflower crop in September/October – whether it’s a 'good or bad' crop will show if it remains for longer or if we might see some relief on pricing,” he said.

Although South Africa produces vegetable oil, it does not make enough to meet local demand, which is growing at 2% annually. It is, therefore, a net importer of oil and relies on the Black Sea region for the rest of its oil. The country only produces 800,000 MT of oil per annum and imports 30% of its demand from other regions.

Some consumers have already started to notice the increases in the price of cooking oil

Botes said that retailers might run fewer promotions on oil due to the increases.

“The ability to promote at 'low' prices will not be possible and promoting at too 'low' price will lead to out-of-stock situations as consumers will jump at the opportunity. So more likely than not a “every day low price” strategy might be followed instead of a deep cut promo strategy,” he said.


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