Season-2016/17 for Belarusian rapeseed market passed the equator – the oilseed supply from farmers is almost absent while import is low due to moderate oil trade pace.
Harvest results and price dynamics
Belarus has been decreasing rapeseed production during several seasons. Unfavorable weather during winter crops planting campaign (lack of soil moisture) and winterkilling (lack of snow cover) were the main reasons for production decline.
Thus, the interest of farmers in rapeseed cultivation descended. Planted area under rapeseed reached the record 438.7 thsd ha in 2013. However, the areas declined almost 2 times over the last 3 seasons due to sharp winterkilling and required replanting bringing extra expenses.
According to the National Statistics Committee of Belarus, the planted areas under rapeseed decreased to 229.1 thsd ha in 2016/17 MY (-11.4% year on year), and the oilseed production totaled 260 thsd tonnes (-32%).
Traditionally, the main rapeseed volumes are sold during August-October. Thus, the majority of processors form their feedstocks for the first half of the season in this period. Taking to account production decline, market operators started to inform about some deficit of rapeseed supply from farmers in October-November. Since November, rapeseed supplies came in small lots or in packed form for mix-feed needs.
Market insiders informed about rapeseed imports that mainly came from Russia due to attractive prices in comparison to the Ukrainian oilseed. There were also supply of Kazakh rapeseed and some companies were interested to buy origin that is even more distant. Rather competitive offers came from RSA and Argentina.
According to polling figures, the bid prices for rapeseed were a bit volatile during the first half of the season. The upward dynamics prevailed, however, there was no significant price growth.
Decrease of rapeseed supply and higher prices for the oilseed in key producing countries were the main reasons for growing of the prices on Belarusian market. At the same time, unfavorable price situation on rapeseed oil market limited the upward trend.
Mainly processors kept the bid prices for rapeseed stable in December-January as they could not find buyers for rapeseed oil. Moreover, oil prices were relatively stable within the period. Thus, since early November selling prices of rapeseed oil on the domestic market were rather stable and reached 1530-1640 RUR/t EXW (765-820 USD/t EXW) by the end of January. At the same time, the bid prices of rapeseed increased by more than 25 USD/t within the period. As of early February, purchasing prices for the oilseed totaled 390-410 USD/t CPT. Some buyers were ready to increase the bid prices to 415-420 USD/t CPT.
Fat&oil holding and processing marginality
New policy aimed at realization of social-economic development of Belarus for 2016-2020 approved by the governmental regulation No18 and presented in January, was rather important for the whole fat&oil industry of the country. This policy involves creation of state fat&oil holding “Belraps”.
Currently the country is developing regulatory framework, market operators informed that the holding will include all Belarusian fat&oil enterprises including the largest ones.
It is expected that the main attention will be given to the key oilseed – rapeseed. However, the country is reducing rapeseed production while soybean and sunflower are imported crops. Moreover, difficulties in selling of rapeseed oil on domestic market are negative too.
Trade activity on both domestic and export markets of rapeseed oil was rather moderate during the first half of the season despite lower oilseed production in Belarus and globally. The downward price trend on global vegetable oils market (palm and sunflower oils) in September-October was the main reason for limiter trade pace.
During the mentioned period, the price for rapeseed oil on Belarusian market was a bit higher than that of sunflower oil particularly Ukrainian origin that led to lower demand for rapeseed product and weak trade activity.
The export of rapeseed oil from Belarus is limited that is negatively affect competitiveness of Belarusian producers.
Under such conditions, several processing companies prefer not to process rapeseed but refine rapeseed oil this season.
Taking to account lack of interest in rapeseed processing, some market operators suppose that creation of fat&oil holding can negatively affect the industry. At the same time, some experts consider that due performance can promote development of the industry as a whole and separate companies in general.
Prospects of rapeseed market
According to the state program of agrarian business development for 2016-2020, Belarus should produce 765 thsd tonnes of rapeseed in 2017. Operative data shows that the planted areas under winter rapeseed totaled 352.5 thsd ha, against planned 360 thsd ha.
Local weather service informed that agro-meteorological conditions were favorable for winter crop development during the first half of the winter. However, there was lack of snow cover in several regions that caused partial winterkilling. As of early February, rapeseed was significantly thinned out in Vitebsk and Gomel oblasts were the oilseed had been in partially poor condition before the dormancy period.
Thus, in case of further favorable weather in February and the spring, rapeseed crop can increase this year.
It should be noted that many processors did not form feedstocks for the second half of the year. Market operators informed that many plants likely would be forced to suspend their activity due to limited domestic rapeseed supply or will have to import the oilseed during the spring.
Consumption of soybean and sunflower meals could increase in Belarus due to active development of livestock industry. Thus, a number of companies plan to combine rapeseed processing with soybean or sunflower crushing this season.
Svetlana Kirichok, APK-Inform Agency
