2014/15-season for Ukrainian rapeseed market - price decrease in the beginning was expected
Rapeseed planting campaign in Ukraine was started traditionally in the third decade of June and to date in the most regions it is close to finish. At the same time some traders have already shipped the first parties of new crop rapeseed on the export market. Also, some processing enterprises has already formed the part of oilseed necessary volumes and started to process it...
This is the information about current tendencies and prospects of Ukrainian rapeseed market development in the season 2014/15.
Harvest and its quality
Last few seasons in Ukraine there was planted areas slight decrease. At the same time, first of all harvested areas depend on the weather conditions while wintering (for winter rapeseed), and maturity stage as well. According to the data of APK-Inform, in the season 2014/15 rapeseed harvested areas will total 861.3 thsd ha, as opposed to the rate of the previous season (996.1 thsd ha).
Thus, in 2014/15 MY it is expected the general production decrease due to the rapeseed average yield at the level of 2.31 t/ha (2.36 t/ha in 2013).
According to the estimates of analysts of APK-Inform, in the current season rapeseed harvest can total 2 mln tonnes, down 300 thsd tonnes compared to the rate of the previous season.
Quality rates of new crop rapeseed depend on the region and harvested period. Rapeseed harvested works traditionally started in the South region - in Kherson and Odessa oblast. At the beginning of harvested works most of agricultural producers of the stated oilseed stated about low yield at the level of 1.5-1.7 t/ha. At the same time, the stated situation was typical not only for some farms in the South regions, but in some Eastern and Central oblasts. The stated fact was based on the unfavorable weather conditions (low temperature) in Ukraine in the period of late March – April.
But, to date agrarians of the Central, Western and Northern oblasts, which started to harvest rapeseed, declare about high yield of the stated commodity (nearly 3.5 t/ha), and estimate the major quality rates as rather high.
At the beginning of harvested works the major problems with quality rates were based on the seeds high moisture content (10-15%) due to the rains in the most regions of the country during the harvested works.
According to the market operators, rapeseed oil content is based on the production region. In the most of regions the stated rate totals 42-46%, meanwhile there are some rapeseed parties with lower oil content.
According to the data of APK-Inform, in the current season rapeseed exports will decrease to 1.8 mln tonnes, as opposed to 2.2 mln tonnes in 2013/14 MY. In the season 2013/14 the major buyers of Ukrainian rapeseed were EU countries – France, Netherlands, Germany, etc. The major companies-exporters of the stated product were Serna (Glencore), Alfred C.Toepfer International (Ukraine), Nibulon, Cargill, Suntrade (Bunge Ukraine).
During last two seasons in Ukraine there was high interest to rapeseed of processing enterprises. At the same time, at the beginning of rapeseed processing, most of companies have well-established rapeseed sales market, or have already made forward contracts on oil and meal/cake supplies.
According to the data of APK-Inform, in 2014/15 rapeseed oil production can total 53.3 thsd tonnes, down 4.9 thsd tonnes compared to rate of the previous season (58.2 thsd tonnes), but up several times compared to the rate of last few seasons. According to the forecast of the analysts, in 2014/15 MY rapeseed meal/cake production will total 71.5 thsd tonnes (78.1 thsd tonnes in the season 2013/14).
Since the beginning of July, 2014 some companies declared that they started to process the stated product. At the same time, in the end of the stated month, exporters shipped new crop rapeseed by-products.
Meanwhile, domestic consumption of rapeseed oil and meal is still limited. The major buyers on Ukrainian domestic market are some producers of feed fodders and cattle-breeding complexes.
Also, in May, 2014 in Lviv oblast was put into operation plant on bio-diesel fuel production from rapeseed. The stated fact made influence on the market development. The plant capacity totals 28 thsd l of fuel daily. The experts stated that additional demand of rapeseed in the stated oblast, where one of the largest rapeseed processors (Oliyar) located, can significantly support prices in the stated region.
In the previous seasons the situation on the rapeseed market was developed according to the standard scenario. But, there were some differences before harvested works. For example, bid prices in UAH for new crop oilseeds were declared before harvested works. Thus, till the early June, 2014 bid prices of export-oriented companies and offer prices of agricultural producers for new crop rapeseed were declared in foreign exchange owing the unstable political situation in the country and exchange fluctuation.
Also, most of processors preferred not to declare bid prices, expecting mass harvested works and prices range stabilization.
In the third decade of July, 2014 rapeseed market faced bid prices significant decrease. The stated fact was based on the prices reduce on the rapeseed export market due to the same trend on the European market, which was based on the rapeseed general production increase in EU countries in the current MY.
At an early date, rapeseed Ukrainian market will face slow, but rather stable trade activity. Most of large-scale rapeseed producers, which did not make contracts on favorable prices, will wait for stable price situation. According to the market operators, domestic rapeseed market will face stable price situation in the second part of August owing the same tendency on the export rapeseed market.
To date, unfavorable weather conditions in the major countries-producers of rapeseed, in particular in Germany and France, and in Canada as well, can influence on the rapeseed harvesting rates and yield, and quality of the stated product as well. Market operators expect further weather worsening will support prices on the global market.
As for long-term prospects, forecasts on rapeseed record harvest in EU-28 countries (22.4 mln tonnes in 2014/15, as opposed to 21.6 mln tonnes in the previous season) will influence on the prices for the stated oilseed.
Svetlana Gnoevets, APK-Inform
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