Creameries did not stop importing Russian sunflower after the government introduced duties and restricted exports. Moreover, after the introduction of this measure, processors imported at a rate 2 times higher than before the introduction of the duty. At the same time, the introduced export duty significantly reduced the volume of sunflower exports from Kazakhstan. The Grain Union presented an overview of the Kazakh sunflower market, reports the APK News agency.
Sunflower production.
According to the Bureau of National Statistics, between 2019 and 2022, sunflower production has shown consistent growth in planted area and gross yield. So, if in 2019 839 thousand tons of sunflower in weight after processing were produced, then in 2022 - 1.3 million tons. Unfavorable growing and harvesting conditions in 2023 led to a significant decrease in production volumes. The forecast for the gross harvest of sunflower is estimated at 973 thousand tons, and taking into account refining (10%) - 876 thousand tons in weight after processing.
Import of sunflower.
Official imports of sunflower in 2022/23 MY amounted to about 220 thousand tons (17% of sunflower production in the Republic of Kazakhstan) worth $98 million or more than 45 billion tenge. Out of 220 thousand tons, the following were imported: 4.6 thousand tons of sunflower for sowing; 2.4 thousand tons of shelled sunflower; 213 thousand tons of other sunflowers. In 2022/23 MY, along with an increase in sunflower production in Kazakhstan, stable imports are also observed. If from October 2022 to January 2023, grain traders and creameries imported 45 thousand tons of Russian sunflower (an average of 11 thousand tons per month), then after the introduction of duties and restrictions on the export of Kazakh sunflower from February to September 2023, only creameries imported 175 thousand tons (on average about 22 thousand tons per month). Thus, during the period of restrictions on the export of Kazakh sunflower, imports did not decrease and, at the end of 2022/23 MY, formed at the level of 21% of the annual demand for raw materials of crude sunflower oil producers.
“When introducing the duty, the government expected that, by limiting grain producers in sunflower exports, it would be able to provide domestic creameries with as much local raw materials as possible, and the plants, in turn, would offer grain producers fair purchase prices. But despite the record harvest in 2022 and sunflower offers from Kazakh grain producers, creameries continued to import Russian sunflower. Moreover, after the introduction of the export duty, creameries imported Russian sunflower at a rate that was 2 times higher than the import rate before the introduction of the duty and restrictions on sunflower exports in Kazakhstan,” the Grain Union believes.
In 2022/23 MY, 79 million dollars or more than 36 billion tenge were spent on the purchase of Russian sunflower (hulled and other) in the amount of 215 thousand tons. For this amount, Kazakh grain producers were unable to sell their products to domestic creameries; for the same amount, Kazakh importers supported Russian farmers through effective demand, the Union document notes.
The total supply of sunflower on the domestic market, taking into account official imports in 2022/23 MY, amounted to more than 1.5 million tons. For comparison: in 2021/22 MY - 1.2 million tons, in 2020/21 MY - 891 thousand tons, in 2019/20 MY - 946 thousand tons.
Use of sunflower.
In the period from October 2022 to September 2023, 1.3 million tons of sunflower were used for processing and export, of which about 1.1 million tons were produced in Kazakhstan and 213 thousand tons were imported from the Russian Federation. The average monthly consumption of sunflower in 2022/23 MY was 109 thousand tons, in 2021/22 MY - 79 thousand tons, in 2020/21 MY - 58 thousand tons, in 2019/20 MY - 63 thousand tons. Data on sunflower processing are presented in other sections of this Review.
Sunflower export.
In MY 2022/23, sunflower exports have been influenced by government regulatory measures since February 2023. Before the introduction of the export duty (October 2022 - January 2023), sunflower exports amounted to 195 thousand tons or 62% of the actual volume in 2022/23 MY (315 thousand tons). Such rates of sunflower export at the beginning of the season became the main reason for the government of Kazakhstan to take measures to limit exports from February 2023. The introduced export duty (20% of the contract value, but not less than 100 euros per ton) significantly reduced the volume of sunflower exports in the following months.
Export indicators from October 2022 to January 2023 were: − hulled sunflower 34 thousand tons (an average of 8.5 thousand tons per month); − other sunflowers 161 thousand tons (an average of 40 thousand tons per month) − a total of about 195 thousand tons of hulled sunflowers and others (an average of about 24 thousand tons per month). From February to September 2023 (after the introduction of the duty), exports amounted to: − hulled sunflower 28 thousand tons (on average 3.5 thousand tons per month); − other sunflowers 91 thousand tons (an average of 11 thousand tons per month) − a total of about 120 thousand tons of hulled sunflowers and others (an average of about 15 thousand tons per month).
The main importers of sunflower from Kazakhstan are China (68%), Uzbekistan (27%) and Tajikistan (2%). These countries account for 97% of total exports. The total share of other importing countries (Azerbaijan, Afghanistan, Iran, Moldova, Poland, Turkey, Ukraine, Czech Republic) amounted to 3% of the annual sunflower export volume. For the period from 2019 to 2022, the share of China, Uzbekistan and Tajikistan in total sunflower exports amounted to 88-95%. Sunflower reserves. With the required optimal stock of 90 thousand tons (a two-month supply for oil production for the domestic market) in Kazakhstan, the actual ending stocks according to statistics were: − as of October 1, 2023 - 322 thousand tons (25% of the volume of sunflower production); − as of October 1, 2022 – 512 thousand tons (50%);
− as of October 1, 2021 - 271 thousand tons (32%); − as of October 1, 2020 - 215 thousand tons (26%).
Based on forecasts for the volume of sunflower production in 2023 (876 thousand tons in weight after processing), as well as imports, domestic consumption and exports, ending stocks as of October 1, 2024 are projected to be up to 370 thousand tons (42%).
The growth in the volume of carryover stocks has been occurring since the period of active regulation of the export of sunflower seeds.
“Inventories exceeding 90 thousand tons are irrational and indicate the current conditions that did not allow grain producers to timely and fully sell their products,” the review notes.
Unsustainable reserves at the end of the 2021/22 season in the amount of more than 400 thousand tons (512 thousand tons - 90 thousand tons) can be considered as lost income for sunflower producers, approximately amounting to more than 100 billion tenge. At the end of the 2022/23 season, final sunflower reserves as of October 1, 2023 amounted to 322 thousand tons, unsustainable reserves - 232 thousand tons worth at least 30 billion tenge.
Preliminary balance for MY 2023/24
Initial reserves as of October 1, 2023 - 322 thousand tons
Production in weight after processing - 876 thousand tons
Official import - 250 thousand tons
Total supply - 1 million 448 thousand tons
Internal processing - 1 million tons
Consumption for seeds - 9 thousand tons
Consumption for fodder - 12 thousand tons
Other consumption - 40 thousand tons
Total domestic consumption - 1 million 061 thousand tons
Export (actual for October 2023) - 17 thousand tons
Total demand - 1 million 078 thousand tons
Reserves - 370 thousand tons
Export (tariff quota at zero duty rate) - 280 thousand tons
Optimal reserves as of October 1, 2024 – 90 thousand tons
It is noted that opening stocks are based on data from the Bureau of National Statistics. Sunflower production is indicated in weight after processing, calculated according to statistics on the sown area in 2022 (1,157 thousand hectares), the assessment of the Ministry of Agriculture of the Republic of Kazakhstan yield (8.4 c/ha), as well as the assessment of the ZKK by refection (10%). Sunflower imports are based on statistical data and are projected to grow by 20% compared to 2022/23 MY. Domestic consumption of sunflower is projected at the level of the actual volume of oilseed processing in 2022/23 MY according to statistics (998 thousand tons). The assessment of the Ministry of Agriculture of the Republic of Kazakhstan for other annual consumption of sunflower per year (seeds, fodder and other consumption) has been accepted. The value of the proposed tariff quota for sunflower exports at a zero duty rate is calculated at 280 thousand tons (taking into account domestic consumption, the formation of an optimal reserve and actual exports for October 2023).