Page 133 - RusRPTJun21

if price caps and other limitations initiatives are implemented throughout 2021 (RUB2.4bn in total). The stated amount implies only a partial reimbursement of the missed income, and the regional basis adds additional uncertainty. We await information on the final implementation mechanism for the subsidies, the distribution between various crops, and which individual companies it will affect.
Prime Minister Mikhail Mishustin has signed a decree implementing a floating tariff for sunflower oil exports. It is to be effective from 1 September 2021 - 31 August 2022, and be calculated as 70% of the difference between USD 1,000/t and the indicative price. The latter is determined as the current average market price for one month, reduced by the size of the adjusting factor (USD 50/t). The Ministry of Agriculture is to monitor the market to determine the indicative price. Sunflower seeds will also be subject to an export duty at 50%, but not less than USD 320/t, effective from 1 July 2021 - 31 August 2022. The export tariff for rapeseed (30%) has been extended to 31 August 2022.
Sugar: The Government is considering an intervention fund and has suggested duty free imports as price stabilisation measures for the sugar market for next season. Kommersant said that the Ministry of Economic Development does not see price caps being prolonged beyond 1 J une.
In MY21 (September/August), the sugar supply in Russia declined to 5.2mnt while consumption has been flattish at 5.9mnt with 0.9mnt of beginning stocks. Sugar prices have increased 90% YoY to RUB 38/kg since the launch of the season. Price capping initiatives for RUB 36/kg in wholesale and RUB 46/kg in retail have been in place from 20 December 2020 and has led to a stabilisation of prices 1Q21 (flattish QoQ).
The implementation of any of the plans being considered by the government could have a significant effect on the market, subject to their scale. Currently, there is an intervention fund for grain, which stands at 360,000t – or less than 0.4% of annual consumption – while the maximum amount the fund is allowed to sell during a year is 1mnt (some 1.2% of consumption). We intend to watch closely for more details on the potential state purchases and future pricing mechanism. Meanwhile, there has been a duty free import quota for sugar 15 May to 31 August, which covers 350,000t or 6% of annual consumption.
Lifting price caps, a partially deferred planting campaign, and potential state purchases for the intervention fund suggest decent outlook for short-term sugar prices, in our view. Previously, Rusagro estimated that all limitations to farming prices would cost some RUB 200mn a month (12% of our annual net income forecast) if they were prolonged to the entirety of 2021. Today, Rusagro reports its 1Q21 financials. We anticipate them to be strong, with EBITDA almost doubling to RUB 10bn as prices remained high, amid certain pressure from capping initiatives.
133 RUSSIA Country Report June 2021 www.intellinews.com