Contradictions of sun seed Russian market

Source

APK-Inform

1928

 

In the most of Russian regions the sun seed harvesting campaign finished. Thus, it is possible to summarize the results of 2014/15 MY beginning. The present article to tell about the market features which appeared in the beginning of the season, about the weather conditions influence on the sun seed Russian market and about the further anticipations.

 

Before speak about the 2014/15 season, summarize the results of 2013/14 MY, especially the sun seed harvest, quality and price.

Despite the sunflower seed record harvest in 2013 (10.06 mln tonnes), the sun seed quality has beenlow due to the unfavourable weather conditions (rains) throughout the country during the harvesting campaign. Meanwhile, the humidity content affected the sun seed acid number rate (more than 8 mg KOH, singularly – 20-22 mg KOH).

Note, the oil crop low quality influenced the price formation on the sun seed market. Thus. in November 2013, the market faced the downward trend. Meanwhile, in the second half of the season, the sun seed prices increased owing the high competition on the raw material market among buyers which wanted to purchase the high quality sun seeds.

 

New season: new factors, new ambitions

In 2014/15 season the export duties on the sun seed market decreased due to the Russia annexation to the World Trade Organization. Thus,since September 1, 2014 the sun seed export duty has totaled 13.24% but not less than 19.88 EUR/t. Note, in 2013/14 MY the sun seed export duty was at the level of 16.62% but not less then 24.94 EUR/t.

In the long-term prospect if the export duty decreases the competition on the market will increase.

The first harvesting works started in the third decade of August 2014, in the Southern region. The first batches of sun seed sort-season variety had unsatisfactory quality but till the harvesting campaign begun the agrarians noted the oil crop quality rates improvement, especially the humidity and acid number ones which were whiting normal limits. Meanwhile the oil content reached 50% in few of batches.

In the Central Black Earth and Volga regions the field works started at the specified period owing the favourable weather conditions. However, the oil content of sun seed first batches did not exceed 40%.

In the Urals region (Altai territory) the first batches of sun seed sort-season variety went on sale in the beginning of September 2014. The sun seed quality was low, the seeds were dry due to the dry weather conditions in summer, the oil content totaled 35%.

The harvesting campaign passed quickly as opposed to the previous season owing the favourable weather conditions. In the end of October 2014, Russia harvested 5.7 mln ha (83.3%) of planned areas (4.5 mln ha as of the same date of 2013), the general production totaled 8.1 mln tonnes (7.5 mln tonnes in 2013).

However, despite the sun seed record general production forecast at the level of 9.4 mln tonnes (by APK-Inform analysts) in 2014, the market development was different. In the beginning of the harvesting campaign the agrarians noted the sunflower yield decrease in the European part of the country due to the unfavourable weather conditions (lack of precipitations' necessary quantity during the sunflower maturation period). Thus, in the current year, the sun seed yield is estimated at the level of 1.46 t/ha (as of October results) which is lower than the previous year rate. According to our estimations, the average yield rate totals 1.72 t/ha in the Southern region, 1.84 t/ha – in the Central Black Earth region, 1.04 t/ha – in the Volga region. Note, in the few of fields the sun seed yield was very low (0.4-0.6 t/ha) and certain sun seed batches achieved 2.2-2.5 t/ha.

According to APK-Inform analysts' forecast, in 2014, the sun seed general production will total 9.2 mln tonnes with the average yield of 1.43 t/ha. The sunflower seed consumption will reach 9.2 mln tonnes, exports – 157.45 thsd tonnes. Note, in 2014/15 MY the sun seed refining capacities to increase by 0.7 mln tonnes annually owing the new enterprises' placement and current plants' modernization. The new sun oil extracting enterprises are located in Belgorod, Ulyanovsk, Orenburg oblasts and in the Republic of Altai. The refining capacities rise will increase the competition among the sun seed consumers, thus the agrarians will profit the situation.

 

Price indices

In the end of September 2014, the sunflower seed domestic prices increased owing to the oil crop demand rise. However, the singular buyers purchased the Ukrainian sun seed with lower prices from the border areas of Ukraine despite the Ukrainian sun seed import ban since August 1, 2014.

Considering the high demand, the upward trend remained on the market. Thus, most of the agrarians increased the supply prices. Note, the demand prices were declarative. The agrarians did not want to carry the trading activity while the prices increase. Moreover, the Rouble depreciation contributed the sun seed prices growth.

 

Will the prices decrease?

According to the market participants’ forecasts, in December 2014, the sun seed supply prices will rise if the USD rate increases and the oil crop high demand remains on the market. However, the trading and purchasing activity will remain low on the sunflower seed market if the agrarians continue to restrain the raw materials sales. Most of the processors will purchase the sun seed if their needs arise. If the raw materials prices grow, the small refining enterprises will suspend the production capacities before the oilseed and its by-products price conjuncture is better.

However, according to the market operators anticipations, in 2014 most of the agrarians will need the working capital financing, thus they will decrease the sun seed prices in the Pre-New Year period so the raw materials supply will increase.

 

Anna Skotar , APK-Inform

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