The oil will be left in reserve – Newspaper Kommersant No. 33 (7478) of 02/27/2023

Yug Rusi Group, a major producer and exporter of vegetable oil, is strengthening its core business after the sale of its land bank. The Group acquired an elevator complex in the Krasnodar Territory with a capacity of more than 80 thousand tons in order to increase the availability of raw materials and increase oil production. The deal took place against the backdrop of deteriorating profitability of oil refineries due to the return of export duties and lower world prices, including after the earthquake in Turkey.

The manager of the Pavlovsky elevator in the Krasnodar Territory, TK Kolos LLC, has come under the control of a large producer and exporter of vegetable oil, Yug Rusi Group, follows from the data of the Unified State Register of Legal Entities. The complex with a capacity of more than 80 thousand tons is considered one of the largest enterprises for the storage and processing of agricultural products in the Russian Federation. Located 140 km from Rostov-on-Don and Krasnodar, at the intersection of highways and railways. Until 2005, the complex was part of the Rusagro group, and then passed to the global grain trader Cargill, which left the asset in 2018. Before the deal with the “South of Rus'” TK “Kolos” belonged to Andrey and Svetlana Shershnev, follows from the data of “SPARK-Interfax”.

In 2021, Yug Rus by Sergey Kislov was the second producer of sunflower oil in Russia and the largest in the production of oil in a bottle (brands Zolotaya Semechka, Avedov), follows from the reporting of Rusagro. According to its own data, Yug Rusi unites nine oil refineries, the largest of which is located in Rostov-on-Don. According to the Oil and Fat Union, in 2022 the factories of the South of Rus’ processed about 1.5 million tons of sunflower. The revenue of MEZ Yug Rusi LLC in 2021 increased by 19.8%, to RUB 66.36 billion.

Yuga Rus told Kommersant that the acquisition of the Pavlovsky elevator will increase the supply of raw materials for oil refineries, increase production, and the group’s partners will be able to reduce the logistics shoulder when delivered to the complex. The terms of the deal were not disclosed. Andrei Shershnev did not promptly respond to Kommersant’s questions by e-mail.

Yug Rusi is expanding its oil production business after the sale in 2022 of the agricultural division with about 200 thousand hectares of agricultural land in the Rostov Region, Krasnodar Territory and Volgograd Region to the Krasnodar Agrotekhnologii LLC. Sources of “Kommersant” said that the company acts in the interests of the Agrocomplex. N. I. Tkachev ex-head of the Ministry of Agriculture Alexander Tkachev. In the “South of Rus'” they indicated that the buyer was an independent organization. According to Sovecon’s estimates, the lands of the “South of Rus'” could cost 20-30 billion rubles, and a Kommersant source on the market believed that the transaction price was even higher.

This season in Russia there was a lack of storage and drying capacity for oilseeds due to a record harvest. According to the forecasts of the Institute for Agricultural Market Studies (IKAR), the harvest of oilseeds this season can reach 27.5-28.8 million tons, including up to 15.7-16.25 million tons of sunflower, which is harvested in the Center and the Volga region due to rains partly shifted this spring.

IKAR General Director Dmitry Rylko believes that the purchase of the Pavlovsky elevator is unlikely to be associated with a record harvest this season, but rather, it is part of a long-term strategy. According to him, the north of the Krasnodar Territory, where the complex is located, is a good place to purchase sunflower, and the main Yuga Rusi oil plant is not far away.

Butter production in Russia in October-December updated record figures due to favorable market conditions and zero export duties. But, notes Dmitry Rylko, the profitability of oil refineries has seriously decreased in recent months. Until recently, agricultural producers raised prices for sunflower seeds, and the cost of vegetable oil began to decline, he clarifies. According to IKAR, in the last week of February oil cost $1.01 thousand per ton (FOB) on average against more than $1.1 thousand at the beginning of the month.

In addition, says Mr. Rylko, due to the depreciation of the ruble since March, the export duty on oil has again appeared. Mikhail Maltsev, executive director of the Oil and Fat Union, says world prices are under pressure due to unclear demand from earthquake-hit Turkey and attempts by other major consumers to play down this factor.

Anatoly Kostyrev