The Government of Russia, which is one of the largest agricultural products suppliers on the world market, continues fighting with the consequent effects of the catastrophic droughts, which caught the country in the summer of 2010, by all the possible ways. After imposition of the grain export embargo, the authorities and market participants, which is more interesting, started seriously thinking of the partial limitation or complete banning of sunflower seeds and crude oil exports from Russia. The purpose of such initiative is rather noble – to decrease the present inordinate high prices, which are dominating on sunflower and by-products market in Russia, due to the fears regarding the low oilseeds harvest. According to representatives of the enterprises, interviewed by the experts of APK-Inform Agency, sunflower and by-products export ban imposition will allow to reduce prices for the products at the expense of the decrease of traders demand.
According to Sergey Korolev, the Deputy Minister of Agriculture, as of to date the Ministry of Agriculture of the Russian Federation just only considers the possibility of imposition of sunflower seeds and sunflower oil export ban. The official assured that the Government will make the final decision regarding the issue after finishing of sunflower harvesting campaign and setting of the market grain balances. It is possible that rapeseed will also get under the limitation dues actions, but also after rapeseed crop volumes final determination. S.Korolev noted that after sunflower and rapeseed harvesting campaign summing, the Ministry of Agriculture will make the adequate decision.
We should note that the Union of Vegetable Oils Producers is one of the initiators of such arrangements. At the end of August 2010 the Union sent the letter to the Government with appeal to limit sunflower and sunflower oil exports.
In particular, the Union offered to impose crude sunflower oil and sunflower seeds export ban for the period of 6 months. And the other version, which the Union offered was the increase of the present export customs duty rates for sunflower seeds to 30%. As a reminder, in Russia the current customs duty rate for sunflower seeds totals 20%, but not less than 30 EUR/t.
As of to date, there is no any official decision for the issue. The representative of the Ministry of Agriculture announced that the Ministry analyzes the situation and discusses the issue with the Union of Vegetable Oils Producers. The Union confirmed the information, and noted that the organization assembles the situation analytic review to date. After presentation of the analysis in details, the Union will continue discussion of the issue on the higher level, announced the representative of the Union of Vegetable Oils Producers.
As about the future sunflower crop in Russia, according to opinion of analysts of APK-Inform Agency, sunflower production forecast is rather pessimistic – 5.6 mln tonnes in bunker weight, or 5.2 mln tonnes in clean weight, down 20% compared to the index of 2009/10 MY (6.9 mln tonnes and 6.4 mln tonnes, respectively), and it is the lowest index during the previous five seasons. The average sunflower yield in Russia in 2010/11 MY totals 0.97 t/ha (1.23 t/ha in 2009), and it is the smallest index since 2001/02 MY.
Of course, due to the expected sunflower seeds supply shortage in Russia in 2010/11 MY, experts of APK-Inform Agency forecast the essential decrease of sunflower oil production – to the level of 2 mln tonnes. According to the market operators estimations, due to the oilseed production decrease in the current season, the processors will satisfy own domestic raw material demands by 60% only.
According to the forecasts of the agency analysts, sunflower oil exports from Russia in 2010/11 MY will decrease by 43% compared to 2009/10 MY – to the level of 300 thsd tonnes, and will possibly become the minimal level during the previous 5 seasons.
At the same time, the experts of APK-Inform Agency think that as of to date there are no any market reasons for imposition of sunflower seeds and sunflower oil export ban from the territory of Russia. The issue is that the current price levels for the products on the domestic market exclude the possibility of the mass exports. According to data of the monitoring, which the agency realized, the major supply share of sunflower oil in the Southern region of the Russian Federation last week started from the minimum level of 37000 RUR/t (nearly 1204 USD/t), meanwhile, the demand prices on FOB–ports of Russia and Ukraine were at the level of 1015-1030 USD/t.
The situation on sunflower seed market is the same, noted the Agency analysts. During the last week the domestic offer prices were at the level of 16000 RUR/t (nearly 520 USD/t) on the terms EXW -Southern Federal District.
If we add the costs for oilseeds delivery to the port to the reporting price and the current duty (20% but not less than 30 EUR/t), we get the unacceptable export price, stated Vadim Litvinenko, the analyst of the oilseed department of APK-Inform Agency.
The experts are sure that it is impossible to discuss the sharp necessity of the products export limitation. At the same time, we may say with a big share of assurance that in the short-term outlook the market will possibly reduce sunflower oil and sunflower seeds prices. Purchasing of Ukrainian sunflower oil by the range of Russian companies, and also the growth of the number of offers of new crop sunflower seeds will be the reasons.
According to V.Litvinenko, the current situation is most negatively reflected at the companies, which have to fulfill the obligations at the previously signed contracts, which the companies signed when sunflower production forecast in Russia in 2010 was absolutely different (7 mln tonnes and even more).
The expert resumed that according to his opinion, imposition of the export ban may happen due to the various reasons. On the one hand, there is the psychological variable which may play its own role of the State "care" about the citizens. On the other hand, there is the factor of defense of Russian oil producing enterprises interests, which has contracts with the prices, which are out of the line with the current market realities.
Roman Malov, the Chairman of the Board of Directors of the State Company "Masloproduct" (Voronezh), also does not see the necessity to impose the ban, because there is no any record crop failure in Russia. Besides according to him, the first results clearly show that sunflower crop volumes will total the same level as the last year. R.Malov thinks that the harvested volumes will satisfy sunflower oil domestic and foreign demands.
The representative of the company said that in the case of imposition of sunflower oil export ban, the prices on the domestic market of Russia will decrease, but he also noted that there is no any critical situation at the present time.
At the middle of August there was the traditional annual growth of sunflower oil prices, when the stocks were almost finished in various factories. The prices increased by nearly 10%. To date the factories started processing new crop raw materials, so there is the phased price decrease for the finished goods, noted R.Malov.
According to him, if the Government imposes sunflower oil export ban, it will not influence the economy of Masloproduct, because the price level on the domestic market is rather profitable. The Chairman of the Board of Directors of the company also noted that the export prices are worse than Russian ones.
The Government of Belarus imposed 6-month rapeseed and rapeseed oil export ban. According to Ivan Danchenko, the Chairman of "Belgospischeprom" Concern, the Government banned rapeseed oil exports due to rapeseeds shortage in the current year.
Rapeseed oil, rapeseeds and flaxseeds export ban came into force on September 15, 2010. According to the Government Decree of the Republic of Belarus #1312, the temporary export will last till March 15, 2011.
The export ban covers export trading with crushed or uncrushed rapeseeds or colza (code 1205 of the unified commodity classification of foreign economic activity), crude and refined rapeseed oil or mustard oil and their fractions (code 1514) and crushed or uncrushed flaxseeds (code 1204 00).
The authorities explained omposition of rapeseeds and rapeseed oil temporary export ban by the raw-materials shortage for fat-and-oil industry enterprises capacity utilization, and the necessity of satisfying the domestic market demands in the raw-materials.
In the current year Belarus will produce much less volumes of rapeseeds, than the country planned due to the difficult winter conditions (over 30% of the sowings perished), and the anomaly heat during the period of filling and ripening of winter and spring rapeseed sowings.
According to estimations of specialists of the Concern "Belgospischeprom", in 2010, rapeseed production (in clean weight) will total nearly 350 thsd tonnes as opposed to 612.4 thsd tonnes in 2009. As a result, the capacity utilization of Belarusian enterprises will be satisfied only for 40-45%.
The country plans to produce 100 thsd tonnes of rapeseed oil from the current rapeseeds capacities, meanwhile the domestic market vegetable oil demand totals 134 thsd tonnes. The Concern specialists stated that there is no export potential for the crop 2010 at all.