The average price of Russian sunflower seed was recorded at RUB 24,444/MT in July, down 7% m-o-m, as high domestic supply created a bearish sentiment throughout the month. Russian sunflower seed prices had initially been supported by bullish domestic retail demand over the first half of the year. However, the price trend reversed recently, with expectations of higher supply, and reached the lowest level since mid-May on 24th July, at RUB 23,725/MT.
Russian sunflower seed production in the 2019/20 season (Sep-Aug) is forecast to soar by 20% y-o-y to 5.6 million tonnes, with yields seen at record levels due to favourable weather in the Black Sea region, according to the USDA. For the 2020/21 season, production is projected at 5.8 million tonnes, an increase of 3% y-o-y, indicating that high supply may continue to put downward pressure on prices.
Domestic consumption is also forecast to increase by 15% y-o-y in the 2019/20 season, aided by the effects of panic-buying during the COVID-19 lockdown. However, the rise in domestic demand is showing signs of slowing, and future demand is unlikely to offset the bearish effects of high production. Domestic consumption is also expected to increase in the 2020/21 season as the USDA forecasts this at 2.5 million tonnes, a slight increase of 100,000 tonnes y-o-y.
The Eurasian Economic Union (EEU), inclusive of Russia, has also extended a ban on sunflower seed exports until the end of August, in order to secure domestic supplies and to provide food security. The ban is expected to increase domestic supply and ending stocks according to the USDA, which will likely put downward price pressure on prices through August.
Due to the limited scope for exportation, as well as high domestic supply, Russian sunflower seed prices are likely continue their bearish trajectory until the end of August.