Will Record Harvest Affect Domestic Oilseed and Vegetable Oil Market in Russia?

The Russian Grain Union sent a letter to Russian President Vladimir Putin with a proposal to cancel the export duty on sunflower oil amid a possible collapse in the domestic oilseeds and vegetable oil market due to an expected record harvest, Interfax reports.

According to the industry association, a change in the regulatory mechanism, first of all, the abandonment of export restrictions, will help to avoid a collapse.

“Ensuring the availability of oil on the domestic market should be formed by introducing mandatory supply quotas with a price calculated from the current purchase prices of feedstock and taking into account the possibility of obtaining additional income from exports,” the union believes.

The RGU also proposes to remove all existing duties on oilseeds and replace them with a duty-free export quota of 6 million tons (broken down by type of oilseeds), which will be valid from March 1 to September 1, 2023. The Union is confident that this will provide the oil and fat industry with a favorable regime for the purchase of raw materials during the period of mass supply of the crop and will allow the formation of resources for the export of sunflower oil.

According to the authors of the letter, this year Russian agricultural producers will be able to harvest about 16.5-17 million tons of sunflower, about 5.5 million tons of soybeans, 4 million tons of rapeseed, and about 2 million tons of oil flax.

“In fact, taking into account the record ending sunflower stocks of 1.5 million tons and imports of 1.5-2 million tons of soybeans for processing, all capacities will be loaded by more than 100%,” the letter says.

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