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25 Mar 2022 | 20:17 UTC
By Harry Clyne
Russia's Ministry of Agriculture has proposed restrictions on exports of sunflower oil between April and September, which will set quotas on outflows based on historical rates and impose heavy taxes on volumes exceeding set limits, a ministry release said March 23.
The terms of the proposals set an export quota of 1.5 million mt until the end of the season to be divided between producers based on historical rates.
Any sunflower oil shipments that exceed this quota will be subject to a tax of at least 70%, at a minimum rate of $1,000/mt.
The restrictions are set to last between April and September, with the quota applying to all exports within that time period.
"We are expecting next week a [formal] government announcement of an export quota system," one trader told S&P Global Commodity Insights. "The government wants to control domestic food prices."
"Quotas will be distributed together with refineries' obligation to sell domestically packaged sunflower oil at a cheap and discounted price," the trader said, "Talks between state officials and the main refineries are ongoing."
Crude sunflower oil prices rose to record highs following Russia's invasion of Ukraine Feb. 24. The global market experienced supply tightness as a result of Ukrainian exports being cut off. Black Sea FOB Ukraine was assessed at $2,174.50/mt March 25, rising 47% from the pre-conflict price of $1,480/mt Feb. 23.
Although the restrictions have not yet been officially announced, market participants have taken steps to suspend shipments in anticipation.
"We've postponed all sunflower oil deals until the official release. I know that many contracts were cancelled or postponed," another trader said.
"The proposal was released [March 23]," the trader said. "Unfortunately, nobody knows when it becomes effective, so it's better to wait and see [before speculating on additional terms]."
In addition to sunflower oil, higher tax rates are proposed for sunflower seeds without any quota allowance. New tax rates on seeds will reach 70% and will be no lower than $490/mt.