Kazakhstan — records and features of the developing market of sunflower seed and oil

APK-Inform

For several recent years, the role of Kazakhstan on the global market of oilseeds continued steadily growing. The government stimulation of production rates, development of the domestic processing industry, as well as the stable global demand, supported the developing Kazakhstan fat-and-oil sector. Sunflower seed is one of the most priority crops in Kazakhstan. Agrarians significantly increased the production volumes — since 2009, its general harvest increased in 2.5 times. Also, the high quality of the oilseed and its by-products attracts the interest of foreign buyers to Kazakhstan. The current article focuses on the results and records of the season-2017/18, as well as the prospects of the season-2018/19.

For several recent seasons, the market of oilseeds in Kazakhstan demonstrated the rapid growth rates. The major drivers of its development included the state policy of diversification of agricultural crops areas, as well as the state program of development of the agro-industrial complex for 2017-2021, adopted in February 2017. So, the authorities plan to reduce the planted areas under wheat by 22% and expand the areas under oilseeds by 44%.

According to the Statistics Committee at the Ministry of National Economy of the Republic of Kazakhstan, in 2017/18 MY the general harvest of oilseeds in the country broke a record and reached 2.36 mln tonnes. Sunflower seed and flaxseed dominated in the structure of oilseeds production, which shares totaled 38% and 29%, respectively.

In the season-2018/19, the rapid upward trend in the production of oilseeds will continue developing. According to the official figures, the planted areas under oilseeds increased by 14% compared with last season, and reached 2.8 mln ha. Despite the excess level of precipitations, due to prolonged rains in August, and the following delays in the harvesting campaign, APK-Inform analysts estimated the production volumes at the level of the new record — 2.6 mln tonnes. It should be noted that changes in the structure of crops planted areas serve as the feature of the current season. Thus, the planted areas under flaxseed increased by 27% — to 1.1 mln ha, while the areas under sunflower seed slightly decreased — to 864 thsd ha (down 3.5%).

 

Sunflower seed: production, processing, balances

According to the USDA figures, for the second running season Kazakhstan will take the 8th position in the world by sunflower seed harvest, while its share in the global production totals 2% only.

For 9 recent years, the harvest of sunflower seed in Kazakhstan increased in 2.5 times — from 368 thsd tonnes in 2009/10 MY, to 903 thsd tonnes in 2017/18 MY. Kazakhstan reached such significant increase, due to the increase in the yield figures, which in the season-2017/18 totaled 1.02 t/ha, against 0.53 t/ha in 2009/10 MY.  The figures became the highest ones in the whole contemporary history of the country.

For several recent seasons, the planted areas under sunflower seed did not significantly change, and in the season-2018/19 the areas totaled 864 thsd ha (down 3.5% compared with 2017/18 MY). According to APK-Inform estimations, the crop yield in the current season will vary at the last season level — 1.02 t/ha. The harvest volumes are estimated at 868.4 thsd tonnes, which is slightly compared with the previous season (down 3.8%).

 

 

Five oblasts in the north of Kazakhstan will mainly produce the major volumes of sunflower seed.

 

TOP-5 regions of sunflower seed production

Oblast

Planted areas, `000 ha

area growth

Yield in 2017, t/ha

production in 2017, `000 tonnes

2017

2018

East Kazakhstan

399,4

413,2

3%

1,2

494,8

Pavlodar

178,0

186,1

5%

0,6

110,3

North Kazakhstan

71,3

68,5

-4%

1,0

98,6

Kostanay

76,3

58,8

-23%

0,8

57,6

Aktobe

34,3

38,0

11%

0,4

11,6

 

Kazakhstan exports the significant share of the produced volumes of sunflower seed, against Ukraine and Russia, which process almost the whole volumes of the oilseed on the domestic market. One of the main reasons is that despite the subsidies for processing of 1 tonne of oilseeds, it is still more profitable for agrarians to export the crops. According to APK-Inform estimations, in 2017/18 MY the export volumes of the oilseed totaled 345 thsd tonnes, which became the maximum result in the whole contemporary history. In the season-2018/19, the figures will reduce to 310 thsd tonnes (down 10%), due to decreasing of the harvest volumes of sunflower seed, as well as increasing of the domestic processing rates, which will reach 583 thsd tonnes (up 2%).

 

 

The growth of domestic oilseeds processing, as well as the reduction of sunflower oil imports, due to covering of the domestic demand of the country with domestically produced goods, are the key trends in the near future. According to the official figures, in 2017/18 MY the production of vegetable oils increased by 10% — to the record level of 381 thsd tonnes, including 71% of refined and crude sunflower oil.

 

 

It should be noted that in the season-2017/18 for the first time the production of crude sunflower oil exceeded the volumes of refined oil production, and reached its absolute maximum — 144 thsd tonnes.

 

Sunflower seed: exports & geography

For several recent seasons, the export volumes of sunflower seed continued steadily growing, and increased from 117 thsd tonnes in 2014/15 MY, to 345 thsd tonnes in the season-2017/18. The upward trend was caused by the demand of the main buyers of the Kazakh oilseed — Uzbekistan and China, which continued increasing their demand for the crop.

 

 

According to APK-Inform analysts, in 2018/19 MY the export rates of sunflower seed will decrease, due to some reduction of the oilseed production, and the growth of the domestic processing rates.

 

 

Sunflower oil: foreign trade & geography

Since the domestic production of sunflower oil in Kazakhstan does not completely meet the country's demand for the product, the share of imports is rather significant. According to APK-Inform estimations, in the season-2017/18 the figures reached 95 thsd tonnes. Russia supplied the main volumes of sunflower oil to Kazakhstan.

It should be noted that due to some changes in the state policy in favor of development of the oilseed processing industry, the share of sunflower oil imports decreased — from 133 thsd tonnes in 2014/15 MY, to 95 thsd tonnes in the current season.

 

 

Also, the share of sunflower oil exports started growing. In the sunflower oil trading segment, China is the main sales partner of Kazakhstan. In September-May of 2017/18 MY, the shipments of the Kazakh product to the country totaled 29.2 thsd tonnes (55% of all the general export volumes), up 60% compared with the volumes supplied to China in September-May of 2016/17 MY. At the same time, for 4 recent seasons the supplies of Kazakh sunflower oil to China increased in more than 18 times.  China is one of the key buyers of products of the Kazakh fat-and-oil industry, and actively invests in oilseed processing in the territory of Kazakhstan. Therefore, the exports of oilseed by-products to the country will continue enlarging.

 

 

For 9 months of 2017/18 MY, the shipments to Uzbekistan increased in 9.5 times, and reached 14.3 thsd tonnes. According to APK-Inform estimations, in 2018/19 MY the export rates will somewhat slow down, due to decreasing of the harvest volumes of sunflower seed, and reduction in the processing volumes of oilseed raw materials.

So, 2017/18 MY for the Kazakh market of sunflower seed and oil can be called as the record one in the production and exports of oilseeds and veg oils. The further prospects and trends in the market segment depend on the harvesting campaign results, the harvest volumes and quality characteristics of sunflower seed, which currently raise some fears due to the difficult weather conditions in August and early September 2018, as well as some delays in the harvesting works.

In the long term, the country should continue developing the modern agricultural technologies, which will both increase the crop yields and neutralize the impact of complex agro-climatic factors on the quality of oilseed crops.

Natalia Gavruk, Analyst at APK-Inform Agency