Increase in export duty on sunflower oil will halt price growth on Russian domestic market - industry union

MOSCOW. Nov 11 (Interfax) - The rise in export duties on sunflower oil, along with higher forecasts for oilseed crop yields, will help halt the price increase for oil on the domestic market, Oil and Fat Union CEO Mikhail Maltsev was quoted as saying by the organization.

Global prices for sunflower oil have been rising since the beginning of the season, Maltsev said. Amid expectations of a significant fall in crop yields in both Russia and other producing countries, this has led to a considerable increase in prices for sunflower seeds, which make up about 90% of oil production costs. Consequently, release prices on the domestic market have adjusted.

The FOB Novorossiysk export index for sunflower oil reached $1,090 per tonne in early November, up 11% from early October and 43.2% year-on-year, Kommersant reported on Monday, citing calculations made by the Price Index Center. The release price for sunflower oil in Russia last week was 100,200 rubles per tonne, up 2.6% from the previous week and up 26% since early September, according to data from SovEcon.

However, the domestic market is shielded from sharp global price increases by the export duty, which after being set to zero for an extended period reached almost 2,900 rubles per tonne in November, Maltsev said. The union forecasts that the duty will be around 8,000 rubles in December and close to 15,000 rubles in January.

A shortfall in sunflower yields in the south is expected to be offset by record harvests in the Volga region and Altai, he said. With the rapeseed and soybean harvests expected to hit new records, total oilseed output could reach last year's level of 29 million tonnes. Many analytical agencies have already revised their forecasts for the sunflower and overall oilseed harvests upwards, he said.

"These factors should reinforce the impact of the rising export duty and further cool the seed market," he said. "Oil and fat enterprises are adjusting release prices in line with the expected impact of the export duty and increased harvest forecasts," despite significant cost increases, he said. "Logistics costs have risen 15% over the past year, wages have increased 20%, expenses related to the Badge of Honesty labeling system have added to costs, packaging costs have risen and the Central Bank's key rate has reached 21%," Maltsev said. Average annual prices for sunflower oil on the domestic market as of September 2024 have decreased 5% over the past three years, he said.