Sunflower prices are falling. Oil is also getting cheaper, but not as actively

Last week, the average sunflower prices in the European part of the country were actively declining, according to data from the Oilworld portal. The purchase price, depending on the region, fell by 2-2.5 thousand rubles. up to 25-26 thousand rubles/t, sales - by 1.5-2 thousand rubles. up to 22.65-27.5 thousand rubles / t. Oil also shows a decrease, but not so active: on average, purchase prices fell by 844 rubles. up to 79.5-80 thousand rubles/t depending on the region, sales - by 833 rubles. up to 79.5-81.4 thousand rubles / t. Export bid and ask (FOB) prices for September fell by $20 to $885 and $865 per ton, respectively.

Meanwhile, the government extended until August 31, 2024 the effect of export customs duties on sunflower oil and meal to protect the domestic food market. The value of the export customs duty rate for sunflower oil will remain the same and will be calculated taking into account the base export price of 82.5 thousand rubles per ton, according to the government website. At the same time, the duty rate for sunflower meal will decrease. It is calculated using a special formula - the difference between the indicative export price (arithmetic average of market prices for the month) and the base price, multiplied by the value of the adjustment coefficient (0.7). With this calculation mechanism, the rate will decrease, despite the fact that the base export price will increase from 13,875 rubles/t to 15,875 rubles/t.

The government also decided to transfer the export duty on sunflower seeds to rubles. According to the decree, the duty should be at least 32 thousand rubles/ton, or 50%. It will be valid from September 1, 2023 to August 31, 2024. Prior to this, the export duty on sunflower was 50%, but not less than $320/t.

Sunflower prices continued to strengthen in August, but the market is beginning to face seasonal and external factors that put additional pressure on prices, said Kirill Lozovoy, an analyst at the OleoScope information and analytical agency. A partial decline was observed already at the end of last month, but de facto in August, sunflower rose in price. “This was mainly due to the weakening of the ruble, which “closed” the decline in export prices for butter. At the same time, the start of the harvesting campaign in the southern regions of Russia has become an additional lever that restrains the growth in the cost of sunflower seeds,” Lozovoy commented to Agroinvestor. Alexander Korbut, an independent grain market expert, also says that the decrease in purchase prices was caused by the start of the harvesting campaign. In addition, world prices do not support the market.

In general, liquidity has been low until recently, says Lozovoy. So, if in July the factories were actively contracting to close the need for raw materials before the end of the season, then in August this issue was basically resolved and many calculated the price for the agricultural year 2023/24 and pursued a cautious purchasing policy. “At the same time, I note that some MEZs have sunflower reserves for work even in the second half of autumn, this mainly concerns the Volga region,” Lozovoy added. In his opinion, there is potential for a short-term decline in sunflower prices in Russia, especially if the ruble strengthens and the harvesting campaign continues without any difficulties.

According to the OleoScope agency, the average cost of a ton of sunflower seeds in the Central Federal District in August increased from 27.2 thousand rubles. (July) up to 30.5 thousand rubles. with VAT, in the South of Russia — from 28.6 thousand rubles/t to 32 thousand rubles/t. In the Volga region, deals were made at 26-27 thousand rubles/t against 23-23.5 thousand rubles/t a month earlier. As for finished products, after a sharp increase in prices against the backdrop of the completion of the “grain deal”, the market found its ceiling and even turned around: in early August, on an FOB basis, export quotations reached the level of $900/t, but by the end of the month they dropped to $850-855 /t, says Lozovoy. Nevertheless, prices for oil increased in the domestic market, although only slightly - transactions were mostly carried out in the region of 85 thousand rubles per ton.

If we talk about exports, in the period from September 2022 to July 2023, Russia sent over 3.6 million tons of sunflower oil abroad. Most of all - to China, India and Turkey, a total of almost 2 million tons, Lozovoy continues. Sunflower deliveries are insignificant and amount to only 225 thousand tons in all directions. The main consignments of oilseeds go to the EAEU countries. According to Korbut, the export of sunflower oil is now going on in a normal mode. “Of course, I would like more, but competition from Ukraine is starting to intensify: they have formed logistics channels and are dumping well on the market,” he concluded.