Russian Sunflower Seeds Oil Production Industry Analysis

Sunflower is one of the most important oilseed crops in the world. Global production grew steadily in last 25 years and is expected a total world output close to 60 million tones towards 2050, therefore the sunflower seed oil production industry will be definitely boost and get favorable opportunities to development. In Russia, fat and oil market is one of the largest, most mature and highly competitive business which is the traditional main producer of the sunflower seeds and sunflower seeds oil. Together with Ukraine, the two countries produce almost half of the sunflower seeds&oil to the world. Recent years, the Russia begin to strengthen its position in the world market in the sunflower seed oil production with the good harvest and other favorable conditions for development.

The Sunflower Seed Oil production in Russia
Growing of sunflower and other oil plants was the most profitable segments in agriculture during recent years in Russia, especially with the great yield of the sunflower seeds.
In 2010-2011 production of vegetable oil in Russia was on plateau. Record crop of sunflower seeds in 2011 was followed by 35% year-to-year increase of production volume in 2012. During recent two years production of vegetable oil in Russia saw significant increase in volume. Year 2014 is worth special attention: production volume almost reached 4.8 million tons, plus 21.8% over 2013. This dynamics was mainly driven by record crop of sunflower seeds in 2013. And according to data from the Russian Ministry of Agriculture, total sown area of sunflower in Russia is currently seen at 6.8 million hectares, a third higher than during the 2000s , while the planted area should be expanded to 8.0-8.5 mln ha by 2017.
The largest manufacturer of sunflower seed oil in Russia today is MEZ “Yug Rusi” with 30.88% of domestic production volume. Production facilities of this holding are located in Central and Southern Federal Districts. Major production facilities are located in sunflower growing areas – in other words, in Krasnodar Territory, Rostov Region, Belgorod Region, Saratov Region and Voronezh Region. This location of production facilities provides high availability of raw seeds and reduces shipment costs of raw seeds.

Favorable Conditions for Development of Sunflower Oil Production Industry
Consumer preference
Consumption of vegetable oil in Russia is dominated by sunflower seed oil and palm oil – together they provide over 90% of consumption volume.
The long-established leaders of sunflower seed and sunflower by-product production are the Russian Federation and Argentina and, more recently, Ukraine, who have become the number one producer and exporter in the world. Together, these countries produce over half of the sunflower seed to the world.
According to predictions by the Russian Institute for Agricultural Market Studies (IKAR), this will allow Russia to increase sunflower production to 12.6 mln tonnes by 2020, compared with 10.6 mln tonnes in 2013.
Expended planting area of the sunflower 
New sown areas will be mainly established in the Volga Federal District of Russia, which currently remains Russia’s leading region in terms of sunflower production, accounting for 43% of the country’s total output. In addition, the new areas may be also established in the south of the country (and in particular the Rostov region), which has good climatic conditions for the growing of sunflower.
Better export prospects
In 2014 the average export price for vegetable oil reduced by 16.5%. However, with consideration of ruble exchange rate manufacturers got extra profit in rubles. Thus, in 2015-2016 competitiveness of Russian vegetable oil is to get stronger on global market. Respectively, export will continue to grow provided current volume of domestic production is sustained.Thus, in 2015-2016 the country faces favorable conditions for further increase of export of vegetable oil and for significant increase of prices on domestic market due to possible under-supply of sunflower seed oil.

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