An excess of sunflower in the domestic market can lead to a price collapse, Mikhail Maltsev said, executive director of the All-Russian Union of Oils and Fats at the 10th 'Where's Margin' International Agrarian Conference.
According to the Ministry of Agriculture of the Russian Federation, Russia in the current season has harvested a record sunflower crop - 12.6 million tons, which is 20% higher than the result of last season. Farmers did not rush to sell a record crop, waiting for prices to rise. The volume of sales of sunflower seeds in September-December 2018, according to Rosstat, amounted to 4.0 million tons, which is only 13% more than the same period last season.
"Having received up to 150% margin on grain and not receiving 100% margin on sunflower, farmers decided to hold it," Mikhail Maltsev said (executive director of the All-Russian Union of Oils and Fats). "The processing capacity is underutilized due to a shortage of raw materials. This has led to the fact that we have reduced the export of oil and fat products, despite the record harvest of oilseeds, and received a slight increase in prices."
Sunflower oil exports are also held back by low world prices and competition from Ukraine, which also harvested a record sunflower crop this season. Now farmers keep a very large sunflower stock. According to Rosstat estimates, as of January 1, 2019, sunflower reserves rose to 2.2 million tons, up 34% from last year. The abundant supply of sunflower will put pressure on prices in the second half of the current season. "In a month, when the entire volume of oilseed enters the market, we will get a collapse," Mikhail Maltsev warns. "Farmers do not even pay back the storage cost."
Source: zol.ru.
