(Bloomberg) -- European grocery stores could run out of a key cooking oil as soon as next month as the war in Ukraine halts trade from the crucial supplier.
Russia's invasion has closed Ukraine's ports, bringing exports of crops such as sunflower oil to a standstill. The country accounts for half of all shipments of the vegetable oil, and processing plants have also been halted, with Kernel Holding SA saying hundreds of its workers have joined the military.
Those volumes could be “impossible” to replace at short notice, according to Fediol, a European Union trade group. The EU typically buys some 200,000 tons a month from Ukraine -- about 35% to 45% of its needs -- and local stockpiles will only last for four to six weeks.
“Beyond that period, it is likely that lack of availability of crude sunflower-seed oil and limited alternatives will lead to a shortfall,” the Brussels-based group said. “This will be felt up to the consumer level.”
The warning shows just how quickly the war is affecting global trade, especially for agricultural commodities, and threatening cost increases for consumers. Benchmark prices of wheat, another of Ukraine's major exports, soared an unprecedented 40% this week, while other vegetable oils like soy and palm hit record highs.
After Ukraine, Russia is the next biggest sunflower-oil shipper. Trade with the country has also been stifled as nations impose sweeping restrictions and sanctions in response to the invasion and vessels face dangers transiting the Black Sea.
In the longer term, the war is also threatening Ukraine's future sunflower harvests because farmers may struggle to even get seeds in the ground.
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