Sunflower and oil prices are rising in Russia

Currently, some oil extraction plants have already announced a break in their work due to the unavailability of raw materials.

According to the latest data, in just one week the cost of a ton of oil has increased by almost 2 thousand rubles and amounted to 87 thousand rubles.

As for sunflower seeds, they have also increased in price by up to 2 thousand rubles per ton and are now trading at almost 40 thousand rubles.

At the same time, in some regions of the country, for example, in the center and in the south, prices have increased even more significantly, up to 47 thousand rubles per ton.

All this is already leading to quite significant consequences: some plants have paused processing, because working with raw materials purchased at such prices does not make sense due to unprofitability.

At the same time, there is no clear understanding of when the situation will normalize and when the plants will return to normal mode.

If the problem is not resolved quickly enough, there is a risk that the shortage on the oil market will increase. This may lead to an even greater rise in its price, including for the end consumer, experts say.

If the government wants to prevent such a scenario, then it should intervene as quickly as possible, they believe.

There are no prerequisites for a way out of the current crisis in sight. Farmers continue to hold on to their products and accumulate reserves.

This, in turn, may lead to prices falling sharply when these reserves have to be sold en masse, freeing up storage facilities for the new harvest.

Considering that there are only a few months left until this harvest, there is a high probability that farmers will nevertheless begin to reduce prices in the near future.

«The sooner the real market situation is assessed and the price of «seeds» is returned to an economically justified level, the less likely it is that the situation of two years ago with the collapse of sunflower prices in the spring due to large accumulated seed stocks will repeat itself,» said Mikhail Maltsev, head of the Oil and Fat Union.

Another problem is that export prices are currently at a level that does not allow for full support of processors’ profitability.

It turns out that oil extraction plants are now almost completely lacking motivation to operate until something changes in the market.

For now, many oil extraction plants are gradually switching to soybeans and rapeseed, but it is obvious that this is a temporary solution, since oil from these crops is practically not in demand within the country, and the reserves of raw materials are several times smaller than sunflower.