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Volga Baikal AGRO NEWS Update on the Russian Sunflower Price Development !!!
Sunflower prices fell sharply but analysts believe that the fall will not last long.
At the same time, the dynamics of prices for oil and sunflower is poorly predictable.
Last week, large sunflower processors reduced purchase prices for raw materials by 2-5 thousand rubles / ton on average to 43.2 thousand rubles / ton, according to the review of the analytical center “SovEcon“. Analysts believe that the reason is the fears of imposing export duties on oil or an attempt to “push” the domestic sunflower market. “We believe that the second option is more likely,” the message says. In the absence of news about the export duty, the sunflower market will begin to grow and update price records in the current season, – predicts SovEcon“.
Analysts note that this is the first decline in sunflower prices in 2021. “Prior to this, quotations were steadily growing following the global and Russian prices for butter. The price level of 45.2 rubles per ton, reached in mid-February, was a record, – said the center in its statement. According to SovEkon, the last week the cost of sunflower oil increased by 325 rubles. up to 99.82 thousand rubles per ton against the background of higher export prices, which added $ 75 to $ 1.33 thousand per ton.
The Executive Director of the Fat and Oil Union Mikhail Maltsev told to Kommersant that sunflower stocks are now at the level of 2 million tons, but agricultural producers are holding back supplies,”accelerating” prices. In his opinion, processors are working for minus and are no longer ready to have more losses. Maltsev says that the reason for their poor financial condition is the limitation of selling prices for oil at retail at the high cost of raw materials. He expects that sunflower prices in the near future may fall below 40 thousand rubles per ton.
CEO of Rusagro Maxim Basov told to Kommersant that there is high uncertainty in the industry, and therefore some processors who have already signed contracts before the summer do not want to increase risks by purchasing sunflower seeds at high prices. Director of SovEkon Andrey Sizov clarified that fixing the selling prices for oil concerns only bottled oil, therefore, it has” a limited negative effect for producers.” In his opinion, at the current export price of oil, sunflower should cost about $ 660 per ton, excluding VAT and more. Dmitry Rylko, General Director of the Institute for Agricultural Market Studies, told to Kommersant that now the risks of imposing an export duty on sunflower oil have grown amid difficulties faced by manufacturers with the supply of cheap products to shelves. “As a result, companies were forced to lower purchasing prices for raw materials,” – he explained.
General Director of the analytical company ProZerno Vladimir Petrichenko told to Agroinvestor that as far as the market expects the introduction of export duties on sunflower oil, it is very difficult to predict the situation with prices for oil and sunflower. The prices for these products are now formed in a non-market way, they are very unpredictable, – the expert notes. “Due to rumors about the imposition of duties, sunflower oil on the world market is becoming more expensive, the price reaches more than $ 1.4 thousand per ton. At the same time, the domestic market for a similar reason stopped or dipped slightly,” – said Petrichenko. According to him, it is now unrealistic to export sunflower because of the duty of 30%, and the limitation of prices for a bottle of packaged sunflower oil leads to the fact that the production of such products becomes unprofitable.
There is a talk in the industry that some processors are specifically cutting back on the production of fixed-price bottled oil, and it’s hard to say what they are doing with these actions. “At first, they achieved the closure of sunflower exports by imposing a duty, now they have a double-edged sword: on the one hand, exports are limited, on the other, prices for sunflower oil are limited by an order. Probably, the industry did not expect such a turnaround,” – Petrichenko said. The fact that manufacturers deliberately reduce the production of bottled oil or go into certain niches – produce more oil with some additives – two sources in the market told it also to Agroinvestor.
The government, the largest retail chains and producers signed agreements on the reduction and stabilization of prices for sunflower oil and sugar on December 16, 2020. This happened after President Vladimir Putin drew attention to the rise in prices. The wholesale price for oil until the end of the first quarter was fixed at 95 rubles per liter, retail – 110 rubles per liter. At the same time, the Ministry of Economic Development warned that if the agreement is not fulfilled, a duty on the export of oil in the amount of 15%, but not less than 135 euros per ton, may be introduced. The Fat and Oil Union has repeatedly noted that the agreements are being respected, but last week it admitted that the duty risk continues to hang like a sword of Damocles over the processors.
