Midterm results of 2012/13 MY for the Russian market of soybeans and by-products
The current MY is in its middle for soybean segment. For the most processing companies that means the major part of the raw-material base is already formed and the most important are the issues of realization of the soybean by-products. In the stated material we offer to analyze the current conjuncture and note the possible prospects of the situation developing by the end of the season.
It is obvious the major volume of soybean in Russia is processed by the fat-and-oil complex enterprises despite the fact in the CIS countries the leader is sunflower owing the high content of oil in seeds, meanwhile soybean takes the second position in the structure of processed oilseeds.
Russian soybean market is in the stage of the active developing based on its capacity increase. In the recent 3 seasons there has been planted areas and the domestic consumption increase: to 2.6 mln tonnes in 2012/13 in comparison with 2.1 mln tonnes in 2010/11 MY. However still note soybean high imports, which in the current season to increase by 8% compared to the previous one. Meanwhile raw-material exports also faced an increase. Thus in 2010/11 MY the Russian Federation exported 0.7 thsd tonnes of soybeans and in 2012/13 MY the stated rate to total 80 thsd tonnes.
Also please note the essential support in the widening of the sales markets is being provided by the food industry: vegetable oil production, food production of soybeans and also soybean by-products usage as the ingredients for food commodities production (confectioneries, dairy plants, food plants). Besides owing the development of the cattle-breeding sector there is high interest to soybean protein.
However in the current season soybean processing enterprise faced the certain problems during the realization of the by-products and by loosing the stable sales markets – poultry and cattle-breeding sectors. Thus the demand decrease was based on the animal origin food imports increase offered at the lower prices compared to the domestic ones. The stated situation caused the prices decrease on the by-products market. But still the raw-materials owners did not support the tendency and increased the soybean sales prices. As a result the processing companies production profitability was put up in the air. Meanwhile the certain processors in the certain periods preferred not to purchase and sometimes stopped the enterprises expecting the more favorable situation on the crop by-products market.
According to the structure of vegetable oils consumption, in 2012/13 MY sun oil consumption will exceed the soybean one by 9 times. However in the recent 3 seasons the same rate for soybean oil increased by 41% (according to our forecast to 240 thsd tonnes). The same tendency is based on the growing demand on the margarine plants, fat-and-oil factories and other food industry enterprises, using oil as the raw-material. Thus, we estimate the soybean oil production in 2012/13 MY to exceed by 25% the same rate of the recent 3 seasons by reaching 375 thsd tonnes.
At the same time despite the production and consumption increase the specialists of oil processing enterprises note the first half of the current season was rather hard due to the increased supply of the commodity caused its prices decrease. While agitating the dynamics of the average sales prices for soybean oil since October, there has been noted the prices decrease. Note the maximum sales prices were only for the previously signed contracts.
Soybean meal/ cake
According to the estimation of APK-Inform Agency, soybean meal/ cake production in the current season to increase by 25% - to 1.8 mln tonnes in comparison with 2010/11 MY. At the same time the stated commodities consumption also will increase and exceed by 28% the same rate of the previous year (to 2.4 mln tonnes). Note food soybean meal imports faces the annual increase owing its consumption growth as the raw-material for soybean flour production, meanwhile domestic production commodities still needed quality improve and sales prices decrease.
Note in the stated period there was rather active sale of the commodity. However the sales parties increase caused the prices lowering. However the current demand for soybean meal/ cake stabilized prices.
The most of the extruded soybean is used for mixed-feed production. Despite the world practice has the wider range of the commodity usage in food industry. But the CIS countries population prefers not to use active the products as soybean milk, tofu and other. So the major sales markets of the Russian extruded soybean are poultry and cattle-breeding complexes.
Note in the first half of the current season the specialists of the processing companies reported that due to the unfavorable weather conditions the soybean oil and meal/ cake were more preferable owing their active demand, which is confirmed by the sales prices for extruded soybean. Thus the commodity volatility was lower compared to the prices violation on the markets of soybean oil and cake. As of to date the owners of the commodity report the season decrease of the trade-purchasing activity due to the weak demand of the major consumers. The current situation caused the extruded soybean sales prices decrease.
In total the first half of the season was rather difficult due to the profitability was under the threat due to the high purchasing prices for raw-material based on the single and unstable supplies of the by-products (oil, cake, extruded soybean). However the Russian soybean market faces the annual increase by production volumes enlargement. This caused by the soybean protein consumption growth on the domestic and world market as well. Meanwhile the growing interest for bio fuel production pressures the soybean complex prices and causes the soybean and by-products prices increase.
Nevertheless soybean protein consumption in Russia will face the annual increase and its usability as well. As for situation development in the second half of the season the activity of trade-purchasing activity will be modest, meanwhile the price situation will develop under the impact of the conjuncture on the oilseeds world and domestic market as well.
expert of the Russian market of alternate oilseeds of APK-Inform Agency
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