Soybeans for Russia already became one of the top-priority and marginal crops, as evidenced not only by the annual expansion of the planted areas under the oilseed, and various development programs, but also construction of new oilseed processing plants.
In 2018/19 MY, the general harvest of soybeans in Russia reached another record and totaled 4 mln tonnes (up 11%, compared with the season-2017/18). Despite the growth of the reporting figures, the processing volumes will remain at the last season level, but the supplies on the foreign market will increase (up 27%).
Soybeans: new record
Due to the active demand rates from both soybean processing enterprises and exporters, agrarians kept the high interest in the oilseed cultivation. In the current season, there observed some increase in all production figures in the reporting market segment. The Far Eastern Federal District is the leader in the oilseed production, and covers nearly 40% of the general harvest volumes of Russian soybeans. Many agrarians of the region reported about their plans for a new season to increase the production of soybeans by 15%, at the expense of increasing of the yield figures.
Despite the annual increase in production, the available volumes of soybeans still fail to cover the whole needs of oilseed processing enterprises. In order to compensate the missing volumes for domestic processing, every year Russia imports more than 2 mln tonnes of the oilseed. So, in September-January of the current MY Russia imported 1.05 mln tonnes of soybeans. Brazil (51%) and Paraguay (30%) were the unchangeable leaders in the supply of soybeans to the country.
Despite the active imports of soybeans, the current market and logistics features also stimulate the exports of the oilseed from Russia.
Agrarians of the Far Eastern and Siberian Districts continued increasing the exports to China, abetted by zeroing of the export duties in 2015, the convenient logistics, as well as the more attractive price situation. At the same time, Russia significantly increased the shipments of soybeans to Belarus, which previously almost did not purchase the Russian oilseed, but mainly focused on the Ukrainian oilseed.
Generally, for 5 months of the current MY Russia exported almost 400 thsd tonnes of soybeans, up 15% compared with the previous season, which formed 38% of the forecast for the season (according to the updated figures, taking into account the shipments to the Customs Union).
Taking into account the active shipments to China, as well as increasing of the share of Belarus, APK-Inform analysts increased the forecast of Russian soybean exports for 2018/19 MY to 1.05 mln tonnes (up +27% compared with 2017/18 MY).
Despite the fact that for several running seasons many oilseed processing plants do not work at full capacity, the country continues actively constructing new plants or modernizing the existing ones. So, Agrocomplex named after Tkachev started constructing a new soybean processing plant in Slavyansk-on-Kuban with the annual capacities of 100 thsd tonnes. The new facilities will appear within frames of the modernization of Slavyansk bakery plant. The launch of the plant is scheduled for September 1, 2019. It will produce soybean oil and cake. Also, Chernozemye LLC, which is the part of Exoil Group, started the design for the construction of a new enterprise for deep processing of oilseeds (soybeans/rapeseed) within frames of development of the special economic zone Terbuny, with the daily capacities of 2 thsd tonnes. The construction of the plant will start in the spring 2019. The launch is scheduled for the first quarter of 2020. The new complex will include a new soybean and rapeseed processing plant, oil hydration line with the production of lecithin, production of soy protein concentrates, oil storage facility with the capacities of 150 thsd m3, and modern elevator with the capacities of 80 thsd tonnes. The list of final products will cover feed soybean meal with various levels of protein content, rapeseed meal, soybean hydrated oil, rapeseed oil, vegetable lecithin, soy protein concentrate, etc. Also, LLC Sodrugestvo plans to build a new large-scale complex for deep processing of oilseeds in Kursk oblast. The nameplate capacities of the complex totals 1 mln tonnes of raw materials per year, including 500 thsd tonnes of soybeans. The complex will annually produce 85 thsd tonnes of soybean oil, 300 thsd tonnes of soybean meal, 200 thsd tonnes of sunflower oil, and 200 thsd tonnes of sunflower meal. The project implementation period totals nearly 3 years.
The active demand of the stock breeding and poultry complexes, in terms of increasing of cattle and poultry livestocks, as well as construction of new farms, became the main drivers for development of the soybean market segment. At the same time, since December of the current season the market decreased its sales rates, due to high raw material prices, in particular in the Southern Federal District. As a result, Russia decreased the production of soybean meal/cake and extruded soybeans. For 5 months of the current season, the volumes already reached 1.4 mln tonnes, which almost met the figures in the same period last MY. At the same time, it is expected that in the current season the consumption rates will slightly increase and reach 3.3 mln tonnes (up 2%, compared with 2017/18 MY).
Almost all produced volumes of soybean meal/cake and extruded soybeans are consumed on the domestic market, and traders export only a small share of the volumes. But Russia demonstrated the upward tendency in the foreign trade of the products. In September-January period, Russia exported 155 thsd tonnes of the products, against 125 thsd tonnes in the same period last season. Since 2016, the Netherlands, Poland and Norway remained the major countries-importers of the Russian products.
For the first 5 months of the current season, soybean oil production reached 345 thsd tonnes, which almost corresponded to the figures in the same period last season. At the same time, in December 2018 the country significant declined the production rates. In particular, many companies-producers of the Southern District did not work at full capacity, due to low demand for the product in terms of the announced offer prices. In turn, oil producers failed to reduce the offer prices, due to high prices for the oilseed raw material. It should be noted that in 2018/19 MY, Russia will produce nearly 830 thsd tonnes of soybean oil, which will remain at the last season level.
For 5 months (September-January), the shipments of soybean oil on foreign markets increased by 17% compared with the same period last season, and totaled 240 thsd tonnes. The exports increased, due to the growth of purchases by Belarus. China and Belgium were the key countries-importers of the Russian oil.
In the first half of the season, the price situation on the soybean market somewhat changed depending on the seasonal factors. In October-January, the prices decreased in terms of the sufficient number of soybean offers from agrarians. But since late January 2019 the price dynamics demonstrated the upward trend, due to lowering of sales by agrarians, in order to form the higher prices. By the end of March, the prices started decreasing again, due to preparation works for the planting campaign, and attracting of the financial resources to the market.
By the end of March, in the Central Federal District the price of soybeans were lower than in the beginning of the season, and totaled 28`000 RUR/t CPT, despite the fact that the harvest volumes of the oilseeds increased by 11% compared with 2017/18 MY. In the reporting period, the supply deficit was observed in the southern Federal district, due to the high concentration of processing capacities in the region. Many processors from the Central District preferred purchasing the oilseed in the Southern District, due to more attractive quality indicators, in particular protein content.
In the Siberian District, the number of offers was sufficient, due to the good harvest in the current season (up 40%). In the Far Eastern District, agrarians mainly formed the prices, while the demand was estimated as rather active.
By the end of March, in the Southern District the prices of soybean meal/cake and extruded soybeans varied within 35`000-36`000 RUR/t EXW, which corresponded to the figures in the beginning of the season.
In the Southern District, the average prices of oil remained at the level of the start of the season — 43`000 RUR/t EXW.
According to experts, in the spring the market of soybeans will face the upward price trend, due to reduction of the carry-over stocks of raw materials (seasonal factor). Also, Russia will reach the record soybean exports, which can form the growth of prices on the domestic market.
High prices for the raw materials will contribute to decreasing of the trading and purchasing activities, and increasing of the prices for soybean by-products. Many buyers will have to switch to the cheaper types of oilseed meals and cakes.
Anna Bulatova, APK-Inform Agency