Oil drained abroad – Newspaper Kommersant No. 222 (7423) dated 11/30/2022

Production growth, favorable prices and a decrease in Ukraine’s share in the world market contribute to an increase in the export of sunflower oil from Russia. Over the two months of the season, shipments more than doubled year on year, to almost 350,000 tons. By the end of the season, shipments may break the record, but there are risks of lower demand from China.

In September-October 2022, the first two months of the season, Russia exported 344.6 thousand tons of sunflower oil, which is more than twice as high as in 2021. Such data was provided by a market participant to Kommersant. According to these estimates, Yug Rusi, Aston and Efko Group of Companies provided a total of almost 55% of deliveries. And the main buyers were Turkey, China and India, which imported about 136 thousand, 82 thousand and 34 thousand tons of oil, respectively.

Director of Sovecon Andrey Sizov explains the growth in exports by the increase in sunflower oil production this season, as well as by the favorable market conditions: attractive world prices, zero export duty and reduced supplies from Ukraine. According to Sovecon, sunflower oil from Russia today costs about $1.26 thousand per ton, which is comparable to the price a year earlier. Since October, a zero duty has been set for the export of the product, and in September the export of butter was taxed at a rate of 8.6 thousand rubles. per ton. In December, the duty will also remain zero, the Ministry of Agriculture reported.

Director General of the Institute for Agricultural Market Studies Dmitry Rylko specifies that the export of sunflower oil in November also continued at a good pace. According to him, oil refineries entered this season with high carry-over stocks of sunflower, which made it possible to start the season briskly, and now zero export duty stimulates shipments. The weak presence in the world market of sunflower oil from Ukraine also contributed to the influx of demand for Russian products, the expert confirms.

Aleksey Gavrilov, director of the export potential division of Efko Group, says that the group has also increased the export of sunflower oil since the beginning of the season. According to him, an important role here was played by the factor of carry-over stocks of raw materials from last season, which, against the background of the expectation of a record sunflower harvest, ensured the loading of factories and the growth of exports in physical terms. The most pronounced jump in shipments has been seen since October, when the export duty was set to zero, the top manager adds.

Kirill Melnikov, Marketing Director of Blago Group, notes that in addition to the duty factor, at the start of the season, a low price for sunflower seeds of the new crop was established. In September-November, the national average cost of raw materials was in the range of 28.2-25.6 thousand rubles. per ton, which is about 11 thousand rubles. per ton below last year’s quotations. In September-October, Blago Group’s oil exports lagged behind last year by several thousand tons, but by the end of the year, the group expects to reach high shipment rates.

Dmitry Rylko does not exclude that the export of sunflower oil from Russia by the end of the season will reach a record 4 million tons. But, the expert notes, much will depend on the results of the record long cleaning. As pointed out in Sovecon, due to the deterioration of weather conditions in the center and the Volga region, sunflower harvesting slowed down to record low levels in 2017. By mid-November, the crop was harvested from less than 65% of the area against 90-95% for the same period in previous years. Kirill Melnikov adds that the situation with sunflower oil exports in 2023 will differ from previous years for several reasons. So, according to him, due to the decrease in the volume of sunflower processing in Ukraine, which previously reached almost 100%, the export of the crop has seriously increased, which will change the structure of the market for both buyers and processors. In addition, Blago Group notes a decrease in demand for sunflower oil from China. Although Russian companies may reorient themselves to export to other Asian countries, adds Mr. Melnikov.

Anatoly Kostyrev