Own beans – Newspaper Kommersant No. 25 (7470) of 02/10/2023
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A record soybean harvest in Russia in 2022 led to a decrease in imports. According to Sovecon, since the beginning of the season, imports of soybeans have decreased by 13% yoy, and the decline may continue. Russian soybeans are cheaper than imported soybeans, taking into account delivery, which makes processors oriented towards the purchase of foreign raw materials less competitive.
Imports of soybeans to Russia from the beginning of the season in September 2022 to January 2023 decreased by about 13%, to 685 thousand tons year-on-year, Sovecon calculated.
According to analysts, all imported volumes in the season are imported from Brazil. Shipments from Paraguay, the world’s other major soybean producer, halted in the spring of 2022, according to a Sovecon review. The fact is that the country harvested a record low soybean crop – 4.2 million tons against 9.9 million tons a year earlier, according to the US Department of Agriculture (USDA). In addition, Paraguayan officials noted difficulties in trade with Russia in connection with the tightening of sanctions due to hostilities in Ukraine, Sovecon writes in a review.
Andrey Sizov, the director of Sovecon, attributes the decline in imports to the record soybean harvest in Russia, primarily in the central part. According to Rosstat, 2.5 million tons of soybeans are harvested here, which is 13% more than a year earlier. The Institute for Agricultural Market Studies (IKAR) clarifies that the final soybean harvest in 2022 in Russia exceeded 5.75 million tons, and may be higher than 6 million tons. A huge harvest was recorded in all macro-regions, which is important in the context of the launch of two large oil plants in the center of the Russian Federation with a total processing capacity of about 2 million tons, with an emphasis on soybeans, IKAR analysts say.
Soybean processors see no problems with reducing imports. Mikhail Maltsev, executive director of the Oil and Fat Union, says that given the record soybean harvest in Russia and the export duty, there are no fears of a shortage of raw materials. The duty on the export of soybeans from Russia at 20%, but not less than $100 per ton, is set until August 31, 2024. Vedomosti, citing sources, wrote in January that in 2023 the Ministry of Agriculture could initiate an increase in the duty to 50% from 2025. The Oil and Fat Union said that the measure would protect the interests of existing oil extraction plants, as well as investments in processing facilities.
Mikhail Khokhlov, director of the oil and raw materials division of Efko Group, adds that the stocks of soybeans in Russia exceed the level of the last season, even against the backdrop of increased processing. According to Sovecon, from the beginning of the season to December 2022, a record 2.8 million tons of vegetable oil were produced in Russia, including about 300 thousand tons of soybean oil. A season earlier, these figures were at the level of 2.4 million tons and 210 thousand tons, respectively.
Andrey Sizov predicts that the decline in imports of soybeans compared to last season may continue given the record Russian harvest and, accordingly, low prices in the domestic market. According to his estimates, Brazilian soybeans now cost about $570 per ton, excluding freight, and with logistics costs, the price for Russian buyers could exceed 40 thousand rubles. per ton. The expert estimates the average cost of soybeans in the domestic market at 35-36 thousand rubles. per ton. According to IKAR, soybeans in the center of the Russian Federation cost about 38 thousand rubles on average. per ton at the beginning of the year, which is 15–20% lower than the values of the end of December 2021. According to Mr. Sizov, in such conditions, the main importer of soybeans, the Sodruzhestvo Group of Companies from Kaliningrad, may find it more difficult to compete with processors operating in the center of the country. In “Commonwealth” “Kommersant” did not answer.
The Ministry of Agriculture also told Kommersant that the reduction in soybean imports is due to the record harvest of this crop in 2022, noting that due to the high gross harvest, selling prices for soybeans today are significantly lower than the levels for the same period last year. According to a representative of the Ministry of Agriculture, the increase in the production of soybeans is one of the trends in the industry. Over the past ten years, they say, soybean sown areas in Russia have grown 2.3 times, to 3.5 million hectares.
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