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A Ray of Hope for Russia’s Sunflower Oil Exports as Government Lowers the Export Tax

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In 2021, Russia’s sunflower oil exports recorded a YoY decline of 40% in the first 10 months. The lower export volumes were driven by higher export taxes on sunflower oil since the beginning of MY 2021-22. The export tax was imposed to control the increase in the domestic price of sunflower oil which resulted from low sunflower oil production during the same period. As the Russian government decides to lower the export tax in February 2022 by more than 10%, there are hopes that the exports will recover by the end of the current MY. Furthermore, USDA has projected that by the end of MY 2021-22 both sunflower oilseed production and exports will recover and the volumes will increase.

Russia has a structured and well-developed sunflower oilseed production and processing sector which has made the country one of the leading producers and exporters of sunflower oil in the world. Sunflower oil is considered a profitable segment in the Russian agricultural market and the country continues to be one of the leading exporters in the global sunflower oil market. Since the beginning of the market year 2021-22 (September 2021 - August 2022), Russia’s sunflower oil exports were subject to heavy export regulations in the form of higher export taxes. Export tax coupled with lower production throughout 2021 pushed down the sunflower oil exports of the country.

Between January-June 2021, Russia produced 2.7 million mt of crude sunflower oil which is a 17.2% YoY decline compared to 2020. As of November 2021, the production volume stood at 589.2 thousand mt, 5% lower compared to November 2020. Even though the month of November is the peak sunflower harvesting season in Russia, the production remains below its usual levels. To ensure that lower production has a minimum impact on the domestic prices, Russia imposed a relatively higher export tax on sunflower seeds and oil. The new tax sets an export duty of 50% which is more than the 30% duty imposed by the previous tax norms.

The export tax had a detrimental impact on Russia’s volume of sunflower oil exports as the sunflower oil from Russia became more expensive in comparison to other sources. During the first 10 months of 2021, Russia exported 1.4 billion tonnes of crude sunflower oil which is a 40% YoY decrease compared to 2020. The export volume fell dramatically in May 2021 which overlapped with the period of high sunflower oil prices in the country. The difference in export volumes continued to grow till July 2021 after which the exports started picking up their pace again. To improve exports, Russia has set its export tax for sunflower oil at USD 251.4 per mt for February 2022 which is an MoM decline of 11.70%. The cost of sunflower oil is anticipated to fall this month as the country looks forward to a fresh batch of harvest. Lowering the duty has transformed the outlook for sunflower oil exports to look positive as the country comes to return to its usual export volumes.


Source: ITC Trademap. HS Code: 151211

Furthermore, USDA has projected that by the end of MY 2021-22 sunflower oilseed production and exports will be more than the previous MY. It is expected that the sunflower oilseed production will be 15.5 mt, which is 16.81% more than MY 2021-22, and correspondingly the sunflower oil production will increase by 14.11% during MY 2021-22. Similarly, the export volume of sunflower oil is projected to be at 3.8 mt in MY 2021-22, 17.06% more than the previous year. Despite the increase in exports, the country is set to have an ending stock of 176 thousand mt which is more than the previous year's 154 thousand mt.

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