Sunflower oil price hits new high

- Last updated on GMT

Related tags: Fruit, Russia

Cost pressures on food producers and processors operating in Russia
look likely to increase as prices for sunflower seed oil rise ever
more rapidly, reports Angela Drujinina.

Many sunflower seed oil suppliers have raised their prices. Some firms implementing a RUR500 ($16.6) per ton hike in the last week alone, causing the upper price margin to hit RUR19,000-19,200 ($633-640) per ton.

The situation may be further exasperated later this year after a prolonged cold spell in the spring delayed the planting season. As a result, only 4.68m hectares (ha) had been sown by 31 May, compared to 4.84m at the same time last year.

This may lead to supply shortages later in the year, which could push prices up even further.

In any case, the domestic sunflower seed oil harvest for the 2005/06 season is predicted to be roughly the same as 2004/05 at 4.8m tons, according to the US Department of Agriculture's Foreign Agricultural Service; something likely to maintain high prices.

The answer may lie in the development of modern, more efficient processing factories. Large, contemporary plants are expected to take sizeable market share off smaller businesses and soviet-era facilities, according to Russia's agricultural market institute, CIAM.

Such modern factories currently control around 42 per cent of the market, with those from the Soviet era on 37 per cent and small and medium businesses on about 10 per cent. Around 11 per cent of processing facilities belong to farmers themselves.

CIAM also predicts the domestic processing industry can grow by 50 per cent over the next few years, though a lack of raw materials to process presents a significant obstacle.

In its April report, the agriculture department of US embassy in Russia said that domestic sunflower seed processing capacity was about 6.6m tons, out of which 6 million tons comes from factories and 600,000 tons from farmers.

Related topics: Ingredients

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