RUSSIA

“Moreover, Russia’s current state policy is aimed at protecting the domestic oilseeds processing market and helps to increase the export of processed products. The sale of processed, value-added goods brings additional income to the agroindustrial complex, plus taxes, jobs and regional development, which is more economically beneficial for the country.”

Turkey, China, Iran and India – none of which are sanctioning Russia – are the largest buyers of Russian vegetable oils. India is particularly notable as it increased its purchases of vegetable oils by almost 50% during 2022, according to the Oil and Fat Union of Russia.

Exports of vegetable oils to Algeria, Egypt, Libya, Iraq and Saudi Arabia also saw great growth, almost doubling in 2022. And despite sanctions, EU imports of Russian sunflower oil boomed to total €97M in 2022, up from €10M in 2021. In contrast, EU imports of Russian sunflowerseed fell to €10M in 2022 from €24M in 2021, according to data from EU statistical agency Eurostat.

Russian exports also increased despite the country imposing an export quota on sunflower oil and banning seed shipments from April to August 2022.

“It was to ensure a balance between food security and export earnings,” Maltsev explains. “The quota guaranteed a sufficient amount of oil and meal consumption on the domestic market. These protective measures were introduced in the interests of consumers. They ensured an uninterrupted supply and steadied prices for processed sunflower products, both on the shelves in stores and for industrial enterprises.”

Russian oilseed producers are also increasingly expanding into Middle East markets. For example, in March 2023, the Efko Group made the first shipment of its Sloboda bottled sunflower oil to Bandar-e Anzali port, Iran, on the Caspian Sea, the first Russian brand in Iran in this product category. Efko also has plans to expand to other Iranian cities, including Tehran. The company’s earlier export milestones this year include the start of exports of Altero sunflower oil to Egypt, and a growing presence in the Asian markets.

Price rollercoaster

Industry experts believe that 2023 will likely be less lucrative for Russian sunflower growers compared to last year since the rise in production is leading to a drop in prices. There has been a surplus of sunflowerseed on the market as of March 2023 “so even if oil plants are loaded to full capacity in the new season, at least 1.7M tonnes of oilseeds will remain”, an

Efko Group analyst, Maxim Panarin, said at Interagromash 2023, an international scientific conference on precision agriculture and the agricultural machinery industry, held in March in Rostov-on-Don, southern Russia.

Overall, global prices for vegetable oils saw great volatility in 2022. “We have not seen such a rally before,” Maltsev said. “At the beginning of the year, prices gradually increased, reaching a peak in May. But since June, prices have seen a sharp drop. As a result, in August, the cost of sunflower and palm oils decreased by 100% compared to April 2022.”

By October, the cost of vegetable oils on the world market stabilised, declining for the 10th month in a row by 2–5% month-to-month, according to the UN Food & Agriculture Organization (FAO).

Seeds and science

While Russia had a record oilseed harvest in 2022, experts are cautious about expecting the same results in the future due to a shortage of seed material, according to analysis from Russian consultants Oil World (not to be confused with ISTA Mielke GmbH Oil World)

One potential issue, which could worsen due to sanctions on machinery exports to Russia, is that the country's agricultural sector is very dependant on imported technologies, which are used to sow 70–90% of the country’s sunflowerseed, according to Russia's Oil World

There are also potential issues related to imports of growing seed. Major suppliers Syngenta, owned by Chem China; Germany-based Bayer; and Australia's Nuseed announced the suspension of shipments of sunflowerseeds to the country as of 1 February, Russian daily newspaper Izvestiya reported.

Industry watchers have described this move as a reaction to Russia’s veterinary watchdog Rosselkhoznadzor banning the import of Syngenta’s sunflower seeds starting on 1 February upon discovering sunflower Phomopsis stem canker in some samples during a routine inspection. There were no direct restrictions made on Bayer.

Those disruptions could pose a challenge for Russia, with farmers potentially needing to rely on domestic seeds for the next harvest, which tend to bring smaller yields. State institutes, along with a handful of private companies, manage the agricultural selection in Russia but they are struggling to provide domestic substitutes for foreign seeds.

The Krasnodar, southern Russia-based AllRussian Research Institute of Oilseeds is at the forefront of oilseeds research.

However, like other institutes, it must address the shifting demands of changing climates, new viruses and pests, according to Russia's Oil World

There are efforts to decrease dependency on foreign seeds. In the Rostov region, for example, there are plans to increase the domestic share of sunflower growing seeds to 31% of market demand by the end of 2023, Russia’s National Union of Breeders and Seed Growers reports.

“It’s a tough task. We must take into account the fact that many farms already purchased imported seeds last year for the 2023 sowing season. Nevertheless, we will continue to promote domestic seed material. It is important to move away from import dependence,” the Rostov oblast’s agriculture and food minister, Konstantin Rachalovsky, said at Interagromash 2023.

To achieve this goal, Russian farmers are increasing the size of the fields dedicated to growing seed material. In the Rostov region, the area for growing corn and sunflowerseed material tripled during 2022 compared to 2021, and will now total around 2,000ha, according to Russian news outlet RBC

The All-Russian Research Institute of Oilseeds is set to grow its hybrid sunflowerseeds on these Rostov fields and institute director Vyacheslav Lukomets is optimistic that there is capacity to fill the export void with domestic seed. “We can grow as many seeds as we need next year. What we need is an order from agricultural producers,” he told the National Union of Breeders and Seed Growers.

The Russian agriculture ministry is also optimistic about import substitutions, reporting that there are enough stocks of sunflower growing seeds for the 2023 sowing season. Russian farmers also bought surplus seed supplies last year –20% more than needed – which should be enough to cover the upcoming 2023 season, says an official. ●

Elena Smirnova writes for International News Services Ltd, UK

Global uncertainty against the backdrop of the Russia/Ukraine conflict, ongoing labour shortages and low yields are among the main issues affecting the palm oil sector, the Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2023) held on 6-8 March in Kuala Lumpur, Malaysia heard.

Forecasts of a drastically reduced soyabean crop in Argentina and regulatory changes – such as the European Union Deforestation Regulation (EUDR) which some in the sector claim is discriminatory against palm oil – were also of concern, the almost 2,000 delegates heard.

However, with forecasts of a new El Niño in July/December and/or in January/ June 2024, climate change and extreme weather events, were set to be the most pressing issues, according to Godrej International director Dorab Mistry, with prices reflecting the “vagaries of climate”.

“A new El Niño could drive prices higher so as to destroy demand. Without El Niño, we can see lower prices after August,” Mistry added.

In addition, Mistry said Malaysian stocks could drop below 2M tonnes due to output disruptions caused by heavy rainfall and rising exports following Indonesia’s curbs on palm oil exports.

Despite the pressures weighing on the sector and with some in the sector claiming regulatory changes discriminated against palm oil, Carl Bek-Nielsen, vice chairman and chief executive director of United Plantations Berhad, said that palm oil demand would increase globally.

“The reality is that in 2030, demand for palm oil will increase [globally],” he said.

While palm oil demand in Europe was expected to decrease by 2.1M tonnes – a drop of 26% - by 2030, demand in India was expected to increase by 6.95M tonnes (86%) with global demand expected to increase by 36% to 27.4M tonnes.

However, he pointed out that in vast parts of Indonesia and Malaysia timely replanting had been neglected, which was one of the reasons for stagnating palm oil yields.