Russian market of sunflower seed - six months of work and downtime?

Source

APK-Inform

2722

Despite the high crop and rather good quality of sunflower in 2014/15 MY, some of the oil extracting enterprises have not started work yet since the beginning of the season or have significantly reduced the oil seed refining volumes. About the conditions being faced by agrarians in the first half of 2014/15 MY and what to expect the market participants in the future is telling the current material.

Season start: basic statistics

According to the data of APK-Inform, in 2014/15 MY in Russia the sunflower planted areas decreased to 6.82 mln ha as opposed to the last year rate (7.27 mln ha) due to the crop rotation. At the same time, some agricultural producers reported about the sowings perish. Thus, according to our data the harvested areas totaled 6.26 mln ha the third maximum rate of all the time of sunflower production on the territory of the Russian Federation. (Thus, in 2011 the harvested areas totaled 7.24 mln ha, in 2013 – 6.8 mln ha).

 

 

Besides the favorable weather conditions being faced in most of the regions promoted the good quality of the oilseeds and the yield rate increase. Thus the average yield in Russia in season-2014/15 reached 1.41 t/ha which is the second maximum rate in the recent 10 years (the maximum rate was in 2013 – 1.48 t/ha).

 

 

As of to date the sunflower harvesting was carried out with 95.5% of the planned areas. At the same time the general production of the oil seed to reach 8.81 mln ha in clean weight as opposed to 10.06 mln tonnes in the previous season.

Despite the sun seed export duty decrease according to the WTO program starting since September, 1, 2014, to 13.24% the oilseed export market is still unattractive. In 2014/15 MY the exports to decline to 70.6 thsd tonnes as opposed to 110.07 thsd tonnes in the previous season. Another one reason of the stated rate decrease is the refining capacities development which in the current season doubled. According to the data of APK-Inform, in the five months of the current season the Russian Federation has exported nearly 18.5 thsd tonnes of sunflower.

Meanwhile, in 2014/15 MY sun seed imports to reach 30.44 thsd tonnes as opposed to 34.88 thsd tonnes a year before. The market participants explain the decline by the import substitution. According to our data, in 2014/15 MY in the period of September, 2014 – January, 2015 the Russian Federation imported just 7.5 thsd tonnes of sun seeds.

High crop does not mean the active refining

Since the beginning of 2014/15 season the refining enterprises reported about the limited supplies of the oilseed on the sun seed market.

In the first month of the season the situation was caused by the fact the sunflower supplies entered the market after being harvested first and the batches were at the level of 100-200 tonnes. Thus there was high competition on the market among the oil refining enterprises for purchasing of the large-scale batches of the oil seeds. Thus there was observed violent increase of supply/ demand prices.

Besides the national currency (Ruble) devaluation also influenced the sunflower supply prices  formation and caused their increase.

Due to the prices constant increase most of the agricultural producers preferred to hold active trade expecting the maximum level of prices. Thus in the first half of the current MY the oilseed supplies entered the market by rather small batches. Still the agrarians who needed to refill working assets were ready to conclude contracts for the raw-material large-scale batches sell.

Under the current conditions the refiners had to decrease the capacities utilization on the veg oil production by declining the need in sun seeds. The situation still negatively influenced the enterprises with the projected capacity of up to 200 tonnes/ day which were not able to satisfy the need in raw-material for further work in time due to the limited financial activities. Besides note some of the enterprises were able to start work only a few months later after the season start at the moment when there were sufficient stocks of the raw-material for continued operation in the short-term prospect.

Since December, 2014 single refining enterprises noted they stopped refining activity before the market conjuncture would be better or before the beginning of the new season 2015/16.

According to the data of APK-Inform in the period of September-January 2014/15 MY the refining enterprises of the Russian Federation refined nearly 4.5 mln tonnes of sunflower for oil (4.27 mln tonnes in the same period of 2013/14 MY) or 48.03% from the sun seeds general supply. Thus by the end of the season the oil refining enterprises to have processed nearly 4.1 mln tonnes of sun seeds. Meanwhile according to the data of Rosstat as of February 1, 2015 sun seeds stocks in the agricultural enterprises totaled 928.4 thsd tonnes.

Margin as the “ghost”

Optimistic forecasts which were announced by the experts in summer, 2014 for 2014/15 season inspired most of the sunflower refiners for active work, however the situation changed in the worse way.

To date there are only single enterprises supplied with the necessary raw-material till the end of the current season. Most of the refiners continue to decrease the production capacities utilization on sunflower refining or prefer to stay aside from it. But the main reason of the current situation is the disbalance between the prices for raw-material and by-products caused by the national currency devaluation and the oilseed sales hold.

But still if the economic situation in the country improves and the national currency stabilizes a lot of foreign enterprises will be able to reach high margin.

 

Anna Skotar, APK-Inform Agency

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