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Russian Federation Oilseeds and Products October Monthly Update

Prepared by: Yelena Vassilieva

Report Highlights:
Post forecasts production of major oilseeds at 8.1 million metric tons (MMT), including 6.7 MMT of sunflowerseeds, 680,000 metric tons (MT) of soybeans, and 720,000 MT of rapeseeds. Russia's imports of these three oilseeds 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. Oilseeds crush will increase from last year by 0.9 MMT to 7.7 MT to produce 2.9 MMT of vegetable oil and 3.4 MMT of oilseed meal. Sunflowerseed oil prices are decreasing, pushing down demand and prices of sunflowerseeds.

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) rate . 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 2008 .

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 oil , 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.

Table 1. Prices of Sunflower seeds and Sunflower Seed Oil, EXW, European Russia

Jun 27 Jul 11 Jul 25 Aug 1 Aug 8 Aug 15 Aug.22 Aug.29 Sep.5 Sep.12 Sep.19
Rubles per MT
Sunflowerseeds 17,500 16,720 14,915 14,250 ND ND ND ND 8,625 8,540 8,520
Sunflowerseeds oil, crude, non refined 46,250 44,530 40,700 39,425 37,350 37,125 33,375 30,500 28,500 27,125 25,940
USD per MT
Sunflowerseeds 748 720 639 609 ND ND ND ND 341 336 337
Sunflowerseeds oil, crude, non refined 1,976 1,917 1,742 1,685 1,518 1,516 1,366 1,236 1,128 1,068 1,027
Source: WJ ProZerno

PSD Tables

Table 2. PSD Sunflower Seeds

Oilseed, Sunflowerseed Russia 2006 2007 2008
2006/2007 2007/2008 2008/2009
Market Year Begin: Sep 2006 Market Year Begin: Sep 2007 Market Year Begin: Sep 2008
Annual Data Displayed New Post Annual Data Displayed New Post Annual Data Displayed Post Oct
USDA official Post Old Data USDA official Post Old Data USDA official Post Old Data
Area Planted 6170 6170 6170 5200 5300 5300 5200 6175 6175
Area Harvested 5900 5900 5900 5000 5006 5006 5900 5950 5950
Beginning Stocks 246 246 246 314 314 314 286 126 157
Production 6750 6750 6750 5650 5657 5660 6700 6650 6700
MY Imports 10 10 10 10 10 10 10 10 10
MY Imp. from U.S. 0 0 0 0 0 0 0 0 0
MY Imp. from EU 0 0 0 0 0 0 0 0 0
Total Supply 7006 7006 7006 5974 5981 5984 6996 6786 6867
MY Exports 162 162 162 40 35 37 130 100 100
MY Exp. to EU 112 80 80 20 10 10 70 40 40
Crush 5980 5980 5980 5160 5240 5240 6041 6080 6080
Food Use Dom. Cons. 200 200 200 208 240 210 215 200 210
Feed Waste Dom. Cons. 350 350 350 280 340 340 310 250 260
Total Dom. Cons. 6530 6530 6530 5648 5820 5790 6566 6530 6550
Ending Stocks 314 314 314 286 126 157 300 156 217
Total Distribution 7006 7006 7006 5974 5981 5984 6996 6786 6867

Table 3. PSD Soybeans

Oilseed, Soybean Russia 2006 2007 2008
2006/2007 2007/2008 2008/2009
Market Year Begin: Sep 2006 Market Year Begin: Sep 2007 Market Year Begin: Jun 2008
Annual Data Displayed New Post Annual Data Displayed New Post Annual Data Displayed Post Oct.
USDA official Post Old Data USDA official Post Old Data USDA official Post Old Data
Area Planted 850 850 850 900 780 780 950 750 750
Area Harvested 815 815 815 709 705 705 725 710 710
Beginning Stocks 22 22 22 22 19 19 19 24 41
Production 807 740 740 652 600 600 700 660 680
MY Imports 34 34 34 295 395 442 250 410 440
MY Imp. from U.S. 0 0 0 0 0 0 0 0 0
MY Imp. from EU 0 0 0 0 0 0 0 0 0
Total Supply 863 796 796 969 1014 1061 969 1094 1161
MY Exports 16 16 16 5 5 5 5 20 30
MY Exp. to EU 0 0 0 0 0 0 0 0 0
Crush 805 741 741 925 970 995 925 1045 1067
Food Use Dom. Cons. 0 0 0 0 0 0 0 0 0
Feed Waste Dom. Cons. 20 20 20 20 15 20 20 0 20
Total Dom. Cons. 825 761 761 945 985 1015 945 1045 1087
Ending Stocks 22 19 19 19 24 41 19 29 44
Total Distribution 863 796 796 969 1014 1061 969 1094 1161

Table 4. PSD Rapeseeds

Oilseed, Rapeseed Russia 2006 2007 2008
2006/2007 2007/2008 2008/2009
Market Year Begin: Jul 2006 Market Year Begin: Jul 2007 Market Year Begin: Jul 2008
Annual Data Displayed New Post Annual Data Displayed New Post Annual Data Displayed Post Oct
USDA official Post Old Data USDA official Post Old Data USDA official Post Old Data
Area Planted 512 512 512 570 660 660 650 700 700
Area Harvested 449 449 449 535 535 535 575 650 650
Beginning Stocks 21 21 21 78 78 78 78 50 63
Production 523 523 523 632 632 632 700 750 720
MY Imports 1 1 1 4 0 0 0 0 0
MY Imp. from U.S. 0 0 0 0 0 0 0 0 0
MY Imp. from EU 0 0 0 0 0 0 0 0 0
Total Supply 545 545 545 714 710 710 778 800 783
MY Exports 79 79 79 125 50 65 140 85 110
MY Exp. to EU 65 65 65 85 48 59 85 65 65
Crush 371 371 371 490 588 560 512 645 575
Food Use Dom. Cons. 0 0 0 0 0 0 0 0 0
Feed Waste Dom. Cons. 17 17 17 17 22 22 17 25 25
Total Dom. Cons. 388 388 388 507 610 582 529 670 600
Ending Stocks 78 78 78 82 50 63 109 45 73
Total Distribution 545 545 545 714 710 710 778 800 783

Date:  01.10.2008

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