Russian market of sunflower by-products - first results of the season-2013/14
The first quarter of 2013/14 MY already passed, therefore there is time to make the midterm summary on the work of the Russian market of sunflower seed by-products. The present article focuses on the features of the beginning of the season, development of the price situation on the market and prospects for its players in the future.
Since the beginning of the season-2013/14, oil-producing enterprises of Russia already produced 6923.4 thsd tonnes of sunflower oil and 6911.9 thsd tonnes of sunflower meal / cake, which exceeded the index in the same period of the season- 2012/13 by almost 13%. First of all, the fact was caused by the rise of industrial capacities for the oilseed processing, and modernization of the existing lines in the current MY. However, it should be noted that the current season for oilseed crushers started a little later than the previous ones. Unfavorable weather conditions during the harvesting campaign of sunflower seed became the reason for the situation development. As a result, many oilseed processing enterprises were able to resume their work after the planned maintenance of their equipment in mid-September only, and some enterprises - in October only.
Features of price formation for sunflower oil since beginning of the season-2013/14
In September 2013 in several oblasts of the European part of the Russian Federation the offer prices for sunflower oil of the new harvest were mainly declared within 29000-30000 RUR/t EXW depending on the batch size, shape, and payment terms. In Western Siberia (Altai Krai) many oilseed processors reported on almost complete absence of the production volumes from the oilseed of the harvest-2013, due to postponement of the harvesting works.
Since October there was observed some decrease of supply / demand prices. It should be noted that the effect of the export market of sunflower oil on the domestic market remained minimum during the period. Many oil-producing enterprises of the European part of Russia usually announced their selling prices within 27000-28000 RUR/t EXW depending on the location of the enterprise. Despite the bearish trend, the trading activity was quite low. In mid-October some oilseed crushers reported that their commodities were fully contracted until the end of the month. The situation was caused by the high demand of buyers in the country and export-oriented companies. In the West Siberian region trading activities were carried out at the prices of 34000-36000 RUR/t EXW.
According to the market participants in November available volumes of sunflower oil came on the market in limited quantity, as most producers realized shipments under previously signed contracts. That is why, if buyers required urgent replenishment of their stocks, they increased purchase prices. By the end of the reporting month, the bid prices in the European part of Russia reached 28500 RUR/t CPT.
In the same period in the West Siberian region there was observed the opposite situation. The offers of sunflower oil came in sufficient quantities, which enabled customers to reduce the bid prices. Thus, consumers were ready to purchases the commodity at 31000 RUR/t CPT.
Price situation on the market of sunflower meal/ cake
The oilseed by-products of the harvest-2013 came on the market since the middle of September. Most producers of sunflower meal /cake reported on low but stable rates of sales. The offer prices for high-protein commodities mainly reached the level of 8000 RUR/t EXW in the European part of Russia, and nearly 11000 RUR/t on the same terms in Western Siberia (Altai Krai).
At the same time, saturation of the market with supplies of the commodity in terms of less active demand provided considerable pressure on the selling prices. According to specialists of the companies, the bearish trend was observed during whole October 2013. The prices in some oblasts were mainly declared within 6500-7500 RUR/t EXW, depending on the batch size, shape, and payment terms. According to many producers, the bearish trend favorably influenced the contracting activity for selling of sunflower meal/ cake. Therefore, by the end of October most sunflower by-products producers reported that they had no free volumes of meal / cake until late November, and some producers - until mid-December. In the reporting period there was observed some activation of the demand of mixed feed companies and livestock complexes, which in turn contributed to a further rise of supply/ demand prices.
Thus, in November in the European part of the Russian Federation sunflower meal offers usually formed the prices of 7500-8000 RUR/t EXW, depending on the location of the enterprise. Sunflower cake was offered for sale within 7000-8500 RUR/t EXW. However, it should be noted that the prices often were declarative only, due to lack of free volumes of the commodities.
Foreign market of sunflower seed by-products
According to the Federal State Statistics Service (Rosstat), since beginning of 2013/14 MY Russia exported 195.2 thsd tonnes of sunflower oil, up 2.25 times compared with the same period in the season-2012/13, due to increased production capacities in the country. At the same time, during two months of the season Russia exported 229.1 thsd tonnes of sunflower meal, down 3.17% compared with the same period in 2012/13 MY, which was primarily caused by low demand of the major countries-importers.
In September of the season-2013/14 the export market was characterized by rather low rates of conclusion of foreign economic contracts. The situation was caused by a sufficiently small number of the commodity offers on foreign markets, due to more attractive prices in the country. Nevertheless, by the end of September the bid prices for sunflower oil and meal of Russian origin slightly increased, but the supply/ demand slightly were mostly declarative. Purchasing prices for Russian oil were often declared within 850-860 USD/t FOB (delivery in October), and sunflower meal - 220-260 USD/t on the same terms.
The slight increase of prices on the export market of sunflower by-products was observed at the end of October, which was directly connected with the relevant trends on the world market of vegetable oils. According to the market participants, the offer prices for oil delivery in November-December mainly totaled 910 USD/t on FOB basis, and sunflower meal - 250 USD/t FOB. At the same time, the rates of conclusion of foreign economic contracts at the declared prices remained low.
The harvesting campaign of sunflower seed not only in Russia, but also in Ukraine and, as a consequence, increasing of the number offers on foreign markets, assisted to keep the low-activity demand and reduction of the purchasing prices. In late November, buyers mostly declared their bid prices for Russian sunflower oil at 885 USD/t FOB. The purchasing prices for sunflower meal usually varied within 240-245 USD/t FOB.
Prospects for development of the market situation
According to forecasts of analysts of APK-Inform Agency, in the season-2013/14 oil-producing enterprises will produce 3.36 mln tonnes of sunflower oil, and 3.35 mln tonnes of sunflower meal/ cake. The export volumes of sunflower oil are expected to reach 1.15 mln tonnes, and sunflower meal - at the level of 1.35 mln tonnes. The imports will total 15 thsd tonnes of sunflower oil, and 0.3 thsd tonnes of sunflower meal/ cake.
As for development of the situation on the market of sunflower oil and meal/ cake in the short-term prospect, many operators believe that until the end of the current calendar year the consumer demand will be pretty high in terms of extremely small number of offers, due to the almost complete lack of free volumes of the commodities from oilseed crushers. The situation will have a positive impact on the price situation. However, in January there is expected some decline of consumer activity and a possible reduction of the prices, due to seasonal factors.
expert of the Russian market of oilseeds of APK-Inform Agency
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