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Russian Federation Oilseeds and Products October 2008 Monthly Update
Production of major oilseeds in Russia is forecast to reach at 8.1 million tonnes, including 6.7 million tonnes of sunflowerseeds, 680,000 tonnes of soybeans, and 720,000 tonnes of rapeseeds according to the USDA Foreign Agricultural Service.
Executive Summary
Post adjusted major oilseed (sunflowerseed, soybean, rapeseed) production forecast from 8.06 Million metric tons (MMT) to 8.1 MMT due to increased forecast of sunflowerseed crop by 50,000 metric tons (MT) to 6.7 MMT. Rapeseeds production is lowered by 30,000 MT to 720,000 MT due to decrease in yields. Meantime, soybean production forecast is increased by 20,000 MT to 680,000 MT due to good weather conditions in the Far East.
Oilseed (sunflowerseed, soybean and rapeseed) imports will be 450,000 MT, including 440,000 MT of soybeans. Exports will be 240,000 MT, including 100,000 MT of sunflowerseeds and 110,000 MT of rapeseeds.
Post forecasts oilseeds crush at 7.72 MMT, including 6.08 MMT of sunflowerseed, almost 1.07 MMT of soybeans, and 575,000 MT of rapeseeds. Production of vegetable oil might increase from 2.5 MMT in MY 2007 to 2.9 MMT in MY 2008. Production of oilseeds meal will increase from 3.0 MMT to 3.4 MMT.
Prices of sunflowerseed oil continue to decrease, and experts forecast that the small crushing companies will be pushed from the market. Along with decreasing demand, prices of sunflowerseed also decreased.
2008 Oilseeds Production
Harvest Progress
According to Russia’s Ministry of Agriculture, Russian farmers harvested sunflowerseed on 976,600 hectares (15.8 percent of the estimated harvest area) by September 22, 2008. Production on this area was 1.7 MMT. The average yield was 1.75 MT/ha, 0.29 MT/ha more than last year. However, experts consider that as harvest moves north of Karsnodar kray sunflowerseed yields will decrease due to unfavorable July weather in the European Black Earth territories and due to traditionally low sunflowerseed yields in Volga Valley, Ural and Siberia. Yields in Voronezh, Belgorod and some other major sunflowerseed territories will be slightly lower than last year. The final average yield will be close to last year’s, and increases in production are attributed only to an increase in harvested area. There is no official data on the progress of soybean and rapeseed harvest, but sources report that rapeseed has been harvested on most of sown area, and that production will exceed last year’s level by at least 8-10 percent. Analysts forecast rapeseed production at 680,000 – 720,000 MT. Soybean harvest is at the very beginning, and yields are higher than last year. Analysts forecast soybean crop at 630,000 – 680,000 MT.
Production Forecast
Post increased major oilseed (sunflowerseed, soybean, and rapeseed) production forecast by 40,000 MT to 8.1 MMT due to increased forecast of sunflowerseed crop by 50,000 metric tons (MT) to 6.7 MMT. Rapeseed production will be 720,000 MT, 30,000 MT decline from the previous forecast. Soybean production forecast is increased by 20,000 MT to 680,000 MT due to favorable weather in the Russian Far East. Russian experts forecast sunflower seed production at 6.6-6.8 MMT in the bunker weight.
Bunker vs. Clean Weight
Official data of oilseeds production are reported only in the bunker weight. However, experts in oilseeds crushing deduct 7-10 percent from sunflowerseeds’ bunker weight to get the clean, or “crusher’s acceptance” weight of sunflowerseeds. This deduction is called “loss allowance” (refaction) rate1. This clean weight is used for calculation of actual oil production. Thus, experts’ estimates and forecasts of vegetable oil production differ from oil production calculated on the bases of bunker weight.
2008 Crush Forecast
Russia’s present total crushing capacity (including new and old crushing plants and shops) is estimated at 8.0 MMT – 9.0 MMT. In MY 2008 the modern portion of crushing capacity will increase due to the operation of several new crushing plants in European Russia. The total crushing capacity will not grow significantly, because old plants and shops could be closed. However, the old and the new crushing facilities can process up to 8.5 MMT of oilseeds. Post forecast that in MY 2008 the total crush of major oilseeds will increase from 6.8 MMT in MY 2007 to 7.72 MMT in MY 2008. Sunflowerseeds crush is forecast at 6.08 MMT, a 16 percent increase from last year. Soybeans crush will continue to increase due to increased crushing at Kaliningrad’s plant. The total crush of soybeans will increase from estimated 995,000 MT in MY 2007 to almost 1.07 MMT in MY 2008. Crushing of rapeseeds will increase from 560,000 MT in 2007 to 575,000 MT in 20082.
Vegetable Oil Production Forecast
Given the standard extraction rates, production of vegetable oil from the three major crops will increase from 2.5 MMT in MY 2007 to 2.91 MMT in MY 2008. Production of sunflowerseed oil is forecast at 2.49 MMT (up from 2.13 MMT in MY 2007), soybean oil production will be 192,000 MT (17,000 MT increase from MY 2007), and rapeseed oil forecast is 224,800 MT (in MY 2007 – 200,000 MT).
Russian experts forecast vegetable oil production in MY 2008 at 2.6 – 2.8 MMT, including 2.4- 2.5 MMT of sunflowerseed oil, 180,000 -190,000 MT of soybean oil. Forecast of rapeseed production vary significantly, from 100,000 MT to 220,000 MT, as data on rapeseeds crushing is not accurate. Increased vegetable oil production coupled with significant carry-over stocks of vegetable oil3, will continue to push vegetable oil prices down, and by summer 2009 may decrease stimuli for expansion of area sown to oilseeds, especially sunflowerseeds.
Oilseeds Meal Production Forecast
Given the standards rates of crushing, production of oilseeds meal in MY 2008 is forecast at 3.43 MMT, or 400,000 MT increase from MY 2007. Sunflowerseeds meal production may increase by 290,000 MT to 2.26 MMT, soybean meal output is likely to increase by 68,000 MT to 831,000 MT, and rapeseeds meal production will increase by approximately 10,000 MT to 337,500 MT.
Trade
MY 2007 Estimate and MY 2008 Forecast
In MY 2008 Russia will export 215,000 MT of oilseeds, including 100,000 MT of sunflowerseeds. In MY 2008 Russia’s competition with Ukraine in the sunflowerseed markets will increase. Potential to increase export will depend on lifting or reduction of export tariffs. The present export tariff on sunflowerseeds is 20 percent but not less than 30 Euro per MT, export tariff on soybeans is 20 percent, but not less than 35 Euro per MT, and export tariff on rapeseeds is 15 percent, but not less than 30 Euro per MT. Russian experts do not expect any changes in this policy.
In MY 2007 Russia exported 37,000 metric tons of sunflowerseeds, including 20,800 metric tons were exported to Kazakhstan, and 4,700 metric tons – to Azerbaijan. Exports to Spain were 3,400 metric tons, and 2,800 metric tons were exported to Syria. Russia’s imports of sunflowerseeds did not exceed 10,000 MT.
Russia increased imports of soybeans from 34,000 MT in MY 2006 to 442,000 MT in MY 2007, including 380,000 MT were imported from Brazil. Other soybeans were imported from Ukraine (32,940 MT), and Paraguay (27,230 MT). Imports from other 7-8 countries did not exceed 700 MT. Imports of soybeans from the U.S. in MY 2007 were 235 MT. Exports of soybeans were 5,000 MT, mostly to China.
Russia’s exports of rapeseeds in MY 2007 (July – June) were 65,000 MT, including 17,660 MT to the Netherlands, 17,540 MT – to Denmark, 10,000 MT – to Lithuania, and 9,330 MT – to Germany. Exports to other countries did not exceed 3,000 MT. The last shipment of rapeseeds in MY 2007 was in January. Exports resumed only in August 2008 with the first 6,800 MT shipped to Lithuania. Given that the rapeseeds crop’s forecast is higher than last year, in MY 2008 exports may reach 110,000 MT.
MY 2007 Trade in Major Oilseeds Products
Vegetable Oil Trade
According to preliminary estimates, Russia’s exports of sunflowerseeds oil dropped by more than two times from 710,978 MT in MY 2006 to 328,557 MT in MY 2007, including exports of crude oil decreased from 624,803 MT to 231,078 MT, and exports of refined oil increased from 86,167 MT to 97,479 MT. Experts forecast that in MY 2008 exports of refined sunflowerseeds oil will continue to increase, while crude oil exports will remain stagnant, but experts do not give any figures. In MY 2007 Russia imported 77,230 MT of crude and 63,143 MT of refined sunflowerseed oil.
Along with growing domestic production, Russia continues to import soybean oil, and in MY 2007 soybean oil imports were 117,030 MT, mostly from the Netherlands (63,532 MT) and from Brazil (24,000 MT). In MY 2006 Russia imported only 18,723 MT of soybean oil. Export of soybean oil is still low, although this export is increasing from the crushing plant in Kaliningrad to the Baltic area. In September 2007 – June 2008 Russia exported 6,300 MT of soybean oil, including 3,500 MT to Lithuania and Poland, while in the same period last year, Russia’s exports of soybean oil were only 2,300 MT to Mongolia and South Korea.
Exports of rapeseeds oil in MY 2007 (MY for rapeseeds and rapeseeds oil is July – June) were 18,202 MT, and will increase in MY 2008. In July –August, 2008, Russia already exported 10,300 MT of rapeseeds oil.
Oilseeds Meal Trade
In MY 2007 Russia exported 625,300 MT of sunflowerseeds meal, and imported 694,800 MT of soybean meal.
Prices
Sunflowerseed oil prices continue to decrease, and weaken the crushers’ demand for sunflowerseeds. Sunflowerseeds were not sold in August, and the first small sales began only in September, 2008. Sunflowerseed prices dropped in this period by 40 percent.
Further Reading
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October 2008
