Unfavorable conditions for sunflower trade have developed in Kazakhstan. This was stated in the Grain Union of the Republic of Kazakhstan. Sunflower stocks are showing steady growth; carryover stocks are regarded as lost profits. Since 2021, the government has been regulating the seed trade: to curb exports, they first introduced quotas, then an export duty. Meanwhile, imports of oilseeds from Russia continue to grow, causing a decline in domestic prices. The Grain Union is asking to cancel the export duty from February 15, reports the APK News agency.
According to the Bureau of National Statistics of the Republic of Kazakhstan, sunflower reserves at the beginning of the new season (October 1, 2023) amounted to 322.2 thousand tons, of which 68.3 thousand tons are concentrated in the warehouses of creameries - this is almost a 2-month supply for production and supplies of sunflower oil to the domestic market, the Grain Union said.
“Sunflower stocks as of October 1 are showing steady growth, which characterizes the presence of unfavorable trading conditions in each past trading season. Unsustainable carry-over inventories are regarded as lost income,” the industry union believes.
From 2021 to the present, sunflower trade is regulated by the government. Thus, in 2021, quantitative restrictions (quotas) were introduced, and from 2023 - an export customs duty on the export of sunflower in the amount of 20% of the contract value, but not less than 100 euros per ton.
Meanwhile, sunflower production showed steady growth from 2019 to 2023, increasing from 839 thousand tons to 1.3 million tons, or by 55%. In addition to the regions traditionally growing sunflower (East Kazakhstan region and Pavlodar region), grain producers from North Kazakhstan region, Kostanay and Karaganda regions showed interest in sunflower as part of production diversification, increasing the area under this crop.
Sunflower imports, according to statistics, increased from 110 thousand tons in the 2019/20 season to 233 thousand tons in 2021/22. In the 2022/23 season, against the backdrop of a record harvest in the Republic of Kazakhstan, sunflower imports decreased slightly (by 1.7%) compared to the previous season. Minimal imports in the 2020/21 season are explained by the introduction by the Russian Federation of a ban on the export of sunflowers.
It is noted that Russia is the main supplier of sunflower when importing Kazakhstan.
In the current season, imports for October-November 2023 amounted to more than 44 thousand tons, which is 1.8 times higher than the level of imports in the same period of the 2022/23 season, 2.8 times higher than the 2021/22 season, and 2020/ 21 years - by 30%, season 2019/20 - 4.5 times.
The union believes that sunflower imports have weakened domestic effective demand:
− in the 2022/23 season by $131 million (about 60 billion tenge);
− in the 2021/22 season – also by $131 million (about 59 billion tenge);
− in the 2020/21 season – by $32 million (about 13 billion tenge);
− in the 2019/20 season – by $29 million (about 12 billion tenge).
“Thus, despite measures to limit the export of Kazakh sunflower, imports of oilseeds from the Russian Federation continue to grow, having more than doubled during the period of export regulation. And this despite the record sunflower harvest in the Republic of Kazakhstan in the 2022/23 season - 1.3 million tons in weight after processing,” the union said.
Import prices, recalculated in tenge and including transport costs, as well as VAT on imports, are influenced by changes in market conditions, exchange rates and railway tariffs. A significant increase in import prices for sunflower from 108 thousand tenge per ton in the 2019/20 season to 265 thousand tenge per ton in 2020/21 is associated with restrictions during the period of anti-Covid measures and associated logistics problems.
According to statistics, in the 2022/23 season, the import price of sunflower increased by 2.7% compared to the previous season (from 254 thousand tenge to 261 thousand tenge per ton), while the domestic price of sunflower decreased by 15% (from 200 thousand tenge to 170 thousand tenge per ton).
Taking into account carryover reserves, as of October 1, the annual total supply of sunflower seeds, taking into account imports, amounted to at least 1 million tons, which is more than 2 times the need for raw materials for the production and supply of sunflower oil to the domestic market.
The domestic market's demand for vegetable oil, including sunflower oil, is 237.2 thousand tons. Taking into account the level of food independence (80% of the total need), domestic production of vegetable oil, including sunflower oil, should be about 190 thousand tons per year. If we assume that this entire volume relates to sunflower oil, then the need for raw materials for the production of 190 thousand tons of refined sunflower oil annually requires 194 thousand tons of crude sunflower oil (461 thousand tons of sunflower per year).
As for processing, according to the union, it is showing steady growth against the backdrop of restrictive measures on sunflower exports. So, if in the 2019/20 season 460 thousand tons of sunflower were processed, then according to the results of the 2022/23 season - 999 thousand tons.
The volume of sunflower processing for October-December 2023 amounted to 283 thousand tons, or an average of 94.3 thousand tons per month, with the domestic market demand being 38.4 thousand tons per month. The share of local sunflower in processing is about 70%.
The union also noted that during the period the duty was in effect, the export of shelled sunflower, which is produced and exported by oil factories, increased significantly.
According to quarterly statistics, sunflower reserves as of January 1, 2024 amounted to 1.074 million tons. Sunflower imports from January to October 2024 (9 months) are projected at 195 thousand tons. The calculation was made from a forecast of an annual import volume of 260 thousand tons (an average of 21.6 thousand tons per month). The actual volume of imports for October-November 2023, according to the BNS, averaged 22.1 thousand tons per month.
Taking into account the volume of sunflower processing by local oil factories in October-December 2023 (an average of 94.3 thousand tons per month), the need for sunflower for local oil factories from January to October 2024 is estimated at 849 thousand tons. Of these, 346 thousand tons of sunflower will be required for the production and supply of sunflower oil to the domestic market from January to October 2024. The remaining volume of sunflower will be processed and exported in the form of sunflower oil in a volume of at least 211 thousand tons.
“As a result, sunflower oil exports in the 2023/24 season are projected to be 300 thousand tons, which is 9% higher than the average for the past 2019-2023 seasons (276 thousand tons). If creameries form a 2-month reserve of sunflower by the beginning of the new season in the amount of 189 thousand tons, and taking into account the reserve for processing (849 thousand tons), the estimated export potential of sunflower for the period from March to October is 226 thousand tons or on average 32 thousand tons per month,” according to ZSK.
The Grain Union considers it extremely important to cancel the export duty on sunflower exports from February 15, 2024.