Russia's other oil is edible and healthy

Now everybody knows that Russia is a major oil producer that delivers vast amounts of the black gold that is the lifeblood of the world economy and is used for everything from transportation as petrol or diesel to petrochemicals and plastics plus a variety of other products that include tar for roads and bitumen for roofs.
Now its worth noting that Russia is one of the largest producers of edible oils and in particular today I am going to talk about Sun Flowers  and the oil that is produced that is a healthy option compared to other types of cooking oils.      
Lets first look at what is going on in the market.  
Over the course of this year, the price of sunflower oil futures have risen by 56%, reaching a price of $1,350.4 per ton. Furthermore, it appears that this upward trajectory is set to continue, with the latest trading session seeing a 0.84% increase in price. The current price is not the highest recorded level of $2,400 per ton, nor is it the lowest recorded level of $600. While there is potential for further growth, this rise is a cause for concern in the food market and may have adverse effects.

The growth was driven by persistent supply chain challenges, higher raw material costs and increased demand for the product, according to the Imarc portal. For instance, sunflower oil prices in China have risen significantly due to high demand from the food industry. Furthermore, the appreciation of the US dollar against the Chinese yuan, which has led to higher oil import costs for China, has contributed to a global price increase.

Also, sunflower oil prices in Ukraine have risen significantly due to severe supply chain disruptions and adverse climatic conditions that have reduced yields. The ongoing military action have further complicated the supply situation, leading to a significant increase in purchase prices and further increases in prices on the world market, given the current tense situation in the industry. 
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In 2023, the global sunflower oil market reached a value of $36 billion. IMARC Group forecasts indicate that the market will reach 60.8 billion by 2032, representing a projected CAGR of 6% from 2023 to 2032. The growth will be associated with a number of factors. For example, sunflower oil is becoming increasingly popular due to consumers becoming more health-conscious. It helps to maintain a balanced diet, as it is low in saturated fats and high in unsaturated fats and vitamin E.
The growing awareness of sunflower oil's health benefits, coupled with its extensive availability through various distribution channels such as supermarkets, hypermarkets, retail stores and online platforms, is driving market expansion. Technological advancements in extraction and processing, which enhance the cost-effectiveness of sunflower oil production, are also contributing to market growth. However, these advances may not keep pace with the growth in demand, which could result in price increases.
Another non-food niche for vegetable oil is the demand for alternatives to traditional fossil fuels. This, in turn, is driving demand for biofuels produced from sunflower oil through transesterification.

However, Fortune Business Insight believes that the main driver of market growth is still the demand for sunflower oil as a healthier cooking oil in the food service industry. The growth of the restaurant industry is driven by consumer interest in dining out and the expansion of restaurant chains. 

Furthermore, this product is used extensively in the production of a range of semi-finished products, including snacks. Furthermore, it is employed as an ingredient in the manufacture of cosmetics, as it facilitates improved skin hydration and provides antioxidant protection.

These same factors are also affecting the Russian market, where sunflower oil is also experiencing a sharp increase in price. As reported by the Kommersant newspaper, the export price of Russian sunflower oil delivered from Novorossiysk has increased by 11% over the past month and by more than 40% over the past year. This, according to the publication, is also affecting domestic prices.
According to the Sovecon company, which specialises in studying agricultural markets, the selling price of sunflower oil in Russia last week was 100.2 thousand rubles per ton, representing a 26% increase since the beginning of September.
As TASS reports, the export duty on sunflower oil from Russia, which has been set at zero since June 2023, equates to 2,891.1 rubles per ton in November 2024. The export duty on sunflower oil and the increase in oilseed crop forecasts in Russia will serve to stabilise prices on the domestic market.

The increase in sunflower oil prices, which has reached 50%, is the result of a number of key factors, including domestic economic conditions, export restrictions and global market trends, according to Artem Deev, head of the AMarkets analytical department. He states that the decline in the value of the ruble against the dollar is a key factor driving up the price of all dollar-denominated goods, including sunflower oil. The cost of the product within the country is directly affected by the weakening of the ruble, given that the price on the domestic market is formed on the basis of export prices and the dollar exchange rate.

Weather conditions, including drought and flooding, have had an adverse impact on the sunflower harvest in Russia and Ukraine. This, combined with a global shortage of vegetable oils, has resulted in an increase in the purchase prices of raw materials, and subsequently the final product, according to the expert.

In order to maintain a greater proportion of the sunflower oil product on the domestic market, the Russian government has introduced a floating export duty. The rate on oil exports is approximately 50%, with an extension until 2026. This restrains exports and stabilises domestic prices. These measures are designed to prevent shortages while maintaining price levels. Artem Deyev anticipates that oil prices may continue to rise by another 10-15% until the end of the year, given the aforementioned factors.
Nikolay Pereslavsky, head of the economic research department at CM Service, reports that, according to the UN FAO, world food prices continued to grow in October. The food price index reached 127.4 points in October, up from 124.4 points in September. The most significant factor contributing to the growth of the indicator in October was the increase in prices for vegetable oils (palm, sunflower and rapeseed), despite expectations of a reduction in production. 

The reduction in sunflower oil production this agricultural season is attributed to a notable decline in the sunflower harvest, a conclusion that this expert also corroborates. The price of sunflower oil is rising in line with the increase in sunflower seed prices. The average increase in the cost of foreign-bred sunflower seeds is 20-30%, which equates to a 3-5% rise in sunflower prices. Concurrently, there will be an increase in the cost of gas and energy, which will have a greater impact on prices than the rise in seed prices. 

Furthermore, Mr. Pereslavsky notes that logistics costs are on the rise. From May to September, expenses have already increased by 10%. The export price of Russian sunflower oil, delivered from Novorossiysk, has increased by over 43.2% year-on-year. As of 1 November 2024, the cost of offers for the supply of sunflower oil for November 2024 has increased to 1,100.00 USD/T. 

A substantial decline in Indonesian palm oil exports, coupled with projections of a suboptimal harvest in Malaysia, has already led to an increase in prices. The increase in demand and prices for palm oil is driving up demand and prices for sunflower oil. Sunflower oil export prices are aligned with global market trends. 
Mr. Nikolay Pereslavsky anticipates that the volume of sunflower oil production in Russia this season will exceed 7.8 million tons, with consumption reaching 2.7 million tons. This season, Russia is on track to export approximately 5.2 million tons of sunflower oil, representing a 1.1 million ton increase over the previous agricultural year and positioning the country as the second largest exporter globally. Russia has held the top position in this category for the past two years. 

The increase in sunflower oil prices on the international market is influencing domestic prices, which have risen by 25% since September. At present, the Russian authorities have no intention of implementing a maximum retail price or markup policy for socially significant food products. "In the future, the dynamics of domestic prices for sunflower oil may indeed be restrained by export duties," the expert states.