Palm oil not influence sunflower oil trading

Source

APK-Inform

2492

Since the beginning of the current season, Russia has faced an active discussion of the issue of the practicability of import duties usage for separate varieties of tropic oils. The import duties provided the variety of both positive and negative aspects. However, on January 1, 2010, the government put out of action the import duties.

As a result, we decided to provide the detailed review of the current situation on the fat-and-oil market of Russia. Vyacheslav Kitaychik, the commercial director of the management company of the holding Solnechnye Producty, agreed to provide own comments concerning the situation.

- Vyacheslav, what positive and negative aspects for the fat-and-oil industry of Russia provide the cancellation of import duties for several varieties of tropic oils?

- To date, tropic oils, imported tot the Russian Federation for margarine production, became the necessary fat-and-oil raw material in mix formulation of industrial fats production. Taking into account the present expiration date of the duties for imports of tropic oils, all producers managed to decrease the prime costs and selling prices of industrial fats and margarines. Formulas of industrial margarines in Russia continue using sunflower oil as the main component, because the economic situation of the fat-and-oil market of Russia continues dictating the maximum usage of sunflower oil even after the cancellation of the import duties.

The positive aspect includes expenditures situation: previously we payed the duties to the government, and consumers had to deal with the financial load, and to date, the prime cost of fat products decreased. At the same time, the import volumes to Russia did not increase due to more interesting price situation on sunflower oil market. In the case of the change of the market situation towards the reduction of palm oil prices in relation to sunflower oil prices, the Russian Federation will increase the product imports.

There are no any negative moments in the cancellation of the import duties for tropic oils, taking into account the situation on the market of sunflower oil.

To date, these two markets have separate consumer branches, and palm oil does not prove the direct pressure on sunflower oil prices. Sunflower oil prices in Russia depend on the supply and demand ratio, and prices for the product on the world market. To date, palm oil price with delivery to Russia totals nearly 1100 USD/t, at the same time, sunflower oil price on the same basis totals nearly 930 USD/t. That is why, there is no any economic sense to provide active usage of tropic oils in formulas of industrial fats.

- In what cases do fat-and-oil producers prefer changing sunflower oil to tropic oils, and what profitable aspects of tropic oils imports?

- Tropic oils are mainly used in production of industrial fats. That is why, we often mean the market segment of margarines and industrial fats, while speaking about tropic oils. In all circumstances, such products should contain the certain volume of liquid oils, especially sunflower oil, and certainly tropic oils. And the ratio usually varies depending on prices and the required quality characteristics. If crude sunflower oil is cheaper by 7% compared to refined palm oil taking into account the cost of delivery to the plant, theoretically processors should make the change. But the market is far from realization of such plans. For example, let's take the current prices for palm oil in Malaysia (800 USD/t), and add 170 USD/t - the cost of delivery to Russian-Ukrainian border, add the VAT (value added tax) and the cost of delivery to plant-producers, and the general final price totals nearly 1100 USD/t, which is very expensive. In the terms of the present national currency prices (1 USD - 30 RUR), palm oil price forms the level of 33000 RUR/t, but sunflower oil price in Russia totals nearly 28000 RUR/t CIF. Thus, processors have no sense to work with tropic oils even in the terms of duty-free imports. During several years, we do not replace sunflower oil to palm oil in our formulas. There was one case at the end of December-2009 and the beginning of January-2010, when sunflower oil prices in the Russian Federation started unduly growing up, and we started thinking about the change over to palm oil. Then, sunflower oil prices decreased due to the influence of the world prices and oversaturation of the market, and the issue lost own relevance.

- What prices for sunflower oil do you expect in the current season in Russian Federation?

- We do not expect for the sudden growth of prices for the oil in the nearest future. We suppose that the prices will stay at the same level. In the current year, the Russian Federation produced nearly 6.4 mln tonnes of sunflower, such volumes allow producing sufficient sunflower oil volumes for satisfaction of all domestic requirements. That is why, we do not forecast the sudden growth of prices in the terms of sunflower oil deficit. Quite the opposite, in the current year, the market will probably face the proficit of sunflower oil, and we will have to export some part of the product, in such case, the price on Russian market will reach the foreign prices, and sunflower oil price will lower to the level of 25000 RUR/t.

- What do you think about the seasonal growth of prices at the end of April?

- To date, most plants do not work at full capacity, but when the necessity arises, and the situation concerns large-scale processing enterprises. Taking into account the factor that several small oil mills remain without any work, due to high prices for sunflower oil, in June we will possibly not notice any growth of prices for sunflower oil, and receive even the ending stocks of sunflower seed. To date, agricultural producers do not hurry to sell the oilseed. According to them, sunflower seed prices should increase in the nearest future. However, the bid prices are much lower compared to the offer prices in the current moment, and taking into account the economic situation of the market of sunflower oil, the market will continue staying in the present condition during rather period of time.

- What are your forecasts concerning development of the situation on the world market of palm oil in the current season...

- The world market of petroleum products provide the influence on the world market of oils. If petroleum prices face the sudden growth, we will also face the growth of pries for all varieties of oils (palm, soybean, sunflower etc.). In such case, we will see the inflation of the "price bulb", because the current year harvest of palm tree fruits and soybean is rather large. Moreover, there should not be any deficit on the market. In other words, if the fundamental factors - supply, demand and consumption - continue working, there will not be any price growth. But if funds will start investing in markets of raw materials, prices for the products will face either the growth or the fall.

- What are the main difficulties in the work with tropic oils in Russia?

- Russia has one but rather severe problem in the sphere of tropic oils: the country has the single port, providing shipment of tropic oils - Taman port. Russia has no other such specialized ports. And the country has no capacities for storing of large-scale volumes of tropic oils at port terminals of Russia. Nevertheless, we hope that the problem will be solved in the nearest future. On the other hand, the close relationship between Russia and Ukraine will lad to usage of specialized terminals of Ukraine for shipment of tropic oils.

- Did import volumes of tropic oils increase after construction of the Black Sea Russian port Taman?

- Import volumes of tropic oils to the Russian Federation did not grow. The whole imported volume became just dispensed. The volume of palm oil imports will never exceed the volume of palm oil consumption.

Summarizing the aforementioned, Vyacheslav Kitaychik stated that the cancellation of custom duties for tropic oils became the right step towards the reduction of prices for finished commodities. The cancellation did not provide any influence on prices for oilseed, grown in the Russian Federation, but at the same time, provided support to fat-and-oil industrial complexes.

Interviewed Viktoria Gorbenko

The holding "Solnechye Producty" is one of leaders of fat-and-oil industry of Russia. The holding includes 10 manufacturing enterprises, producing mayonnaise, packaged and industrial margarine, bulked and packaged vegetable oils, mustard, laundry and toilet soap, other technical products. The holding produces mayonnaise under trademarks "Moscow Provansal", "Oliviez", "Chydesnitsa", margarine under trademarks "Jar-pechka" and "Rossyanka", bottled sunflower oil under trade marks "Yarko" and "Rossyanka". The company sales own products in Russia and the CIS countries. The company also provides exports of bulked sunflower oil and meal to far-abroad countries.

Advertising

Enter