London — Ukraine's sunflower oil market could hit $700/mt as the prompt was getting tight, sources said Tuesday.

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Plants continued to struggle to source sunflower seeds for oil crushing as farmers preferred to sit on their stocks waiting for prices to climb further, the sources said.

FOB Chornomorsk 3,000 mt parcels loading in March were assessed at $668/mt Monday by S&P Global Platts, up $6/mt on the day as offers disappeared and bids moved higher.

Meanwhile, snowy weather has disrupted the flow of seeds for planting. Around 70% of seeds are transported by truck, with drivers having struggled to navigate the roads in heavy winter conditions. That has resulted in a number of crushing plants, particularly smaller plants, being unable to crush seeds.

Some of the larger plants were well covered until April-May but, due to the high demand, were holding back from selling the oil they have, sources said.

India and Iraq have been very active in the market while demand from China and Europe was expected to grow in due course. Moreover, other vegetable oils such as soybean oil and palm oil have been strong on their respective exchanges.

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And with some big players focusing more exclusively on destination markets, "the FOB market is very dry, with volumes getting smaller. If this trend continues, we could see prices hit $700/mt soon," a source said.

Nonetheless, sources expected more sunflower seeds to be released onto the market from February, which should alleviate the price pressure and see greater volume of oil available.

-- James Colquhoun, james.colquhoun@spglobal.com

-- Edited by Daniel Lalor, newsdesk@spglobal.com