Sunflower, precipitation is possible – Newspaper Kommersant No. 212 (7413) dated 11/16/2022

Deteriorating weather conditions in the center of the country and the Volga region seriously hampered sunflower harvesting, which slowed down to record low levels in 2017. So far, the culture has been harvested from less than 65% of the area against 90-95% for the same period in previous years. This may lead to an increase in sunflower prices, but the situation for oil refineries still remains favorable.

The pace of sunflower harvesting has slowed to record low levels in 2017, when 15% of the area remained unharvested, according to a Sovecon review. According to analysts, sunflower harvested from 6.4 million hectares as of November 10 against 9.5 million hectares a year earlier. 64% of crops have been processed, and in previous years 90-95% were harvested on these dates, the document says. Against this background, Sovecon lowered its sunflower harvest forecast for this year from 17 million tons to 16.1 million tons. As of November 10, 11.6 million tons of sunflower were harvested.

The Institute for Agricultural Market Studies (IKAR) expects a sunflower harvest of 16.35 million tons, says its CEO Dmitry Rylko. According to the expert, the actual harvesting rate may recently exceed the reporting data, and part of the crop may be harvested “with acceptable quality” in the spring of 2023. However, Kirill Melnikov, Marketing Director of Blago Group, clarifies that if the weather conditions worsen, the fee may be further reduced. The most problematic were the Central and Volga federal districts, he notes. The Steppe agricultural holding operating in the south of the Russian Federation “completed the harvesting of sunflower seeds in the optimal time,” CEO Andrey Neduzhko assured him.

Dmitry Rylko clarifies that at the same time, the lack of storage and drying capacities among agricultural producers stimulates the supply of sunflower. Farmers are increasing sales, processors’ demand has intensified, there are reports of queues at oil refineries, Sovecon analysts confirm. According to them, sunflower stocks at agricultural producers fell to the minimum for nine seasons of 1.2 million tons.

Andrey Sizov, director of Sovecon, believes that there should still be enough sunflower, but for processors who were waiting for a record harvest, “the situation may not be very comfortable.” According to him, in a number of regions processors may start raising prices for raw materials. According to Sovecon, last week sunflower seeds cost an average of 21.05 thousand rubles. per ton.

A Kommersant source in the industry agrees that cleaning difficulties can lead to higher prices.

According to Sovecon, many processors demand discounts from sunflower sellers, referring to the quality of the sunflower seeds. Kirill Melnikov explains that due to heavy rainfall in September and October, batches appeared with an excess of acid number (the main indicator of the quality of raw materials), but “the situation is not critical.” Mikhail Khokhlov, director of the oil and raw materials division of Efko Group of Companies, adds that the increase in the indicator “is observed unevenly, from region to region”, the group continues to purchase raw materials.

Kommersant’s source on the market adds that sunflower seed processors had large carry-over stocks from last season, which reduce the risks associated with the new crop. Although some companies have already noted negative effects due to problems with raw materials. Thus, Rusagro Group reduced the production of vegetable oil in the third quarter by 10% yoy, to 124,000 tons, also due to a shift in the timing of harvesting.

Andrey Sizov clarifies that fluctuations in sunflower prices in the Russian Federation do not affect oil quotes. In the domestic market, it costs an average of 73.75 thousand rubles. per ton, for export – $1.3 thousand per ton. There are no prerequisites for a significant increase in quotations, given the news about a possible extension of the Istanbul grain deal and relatively low prices for palm and soybean oils, Mr. Sizov believes.

The Ministry of Agriculture told Kommersant that they expect late harvesting of the remaining sunflower areas, and the gross harvest is forecast at 15.7 million tons, which “will allow the oil refineries to be fully loaded and oil exports to develop.” According to the forecasts of the Oil and Fat Union, the production of vegetable oils in the Russian Federation this season will increase by 27%, to 9.6 million tons, and exports by 70%, to 7.5 million tons.

Anatoly Kostyrev