After a series of not very successful seasons for the Russian market of rapeseed, 2017/18 MY became a turning point. Thus, the record harvest increased by more than 50%, which will allow to increase loading of the production capacities, and increase the export potential.
Harvest & loading of capacities
In the season-2017/18, the market of rapeseed demonstrated a significant increase of performance indicators which was somewhat unexpected for market participants in terms of the reduced interest in growing of the oilseed for several recent years. First of all, a significant share of losses of the planted areas (taking into account the climatic features of the country and low temperature regimes in some regions) became the main reason for reduction of the crop areas.
At the same time, we should note that the record harvest in the current season was achieved, due to favourable weather conditions and high yield figures, which increased by 42.7% compared with the previous year. The planted areas of rapeseed slightly increased – up 4.4%.
Thus, in 2017 the average yield in the country totaled 1.57 t/ha, and the harvest volumes reached a record for all contemporary history of Russia – 1.5 mln tonnes (up 50.5%).
Also, in the current season there were some structural changes by regions: planted areas under winter rapeseed increased in the south of the country, and spring rapeseed areas increased in the Central Federal District. The Ural and in Siberian Districts increased the areas, which compensated the decline of interest in the oilseed in the Volga District.
The record harvest volumes will allow to most processing enterprises to comfortably work on the market with sufficient provision of raw materials. According to market operators, to date loading figures of the production capacities do not exceed 70%. At the same time, the competition rates between oilseed processors and exporters also increased. So, in August-December of 2017/18 MY the export volumes of rapeseed from the country reached a record at 164.4 thsd tonnes. Russia mainly delivered rapeseed to Mongolia, China, Bangladesh, Nepal and Romania. Due to its geographical location, the Siberian District is a leader in the exports of rapeseed to China and Mongolia. Therefore, APK-Inform analysts forecasted the largest exports ever of the oilseed in the whole current season, up 4.2 times compared with the previous year figures, which will reach 265 thsd tonnes.
According to APK-Inform estimations, in the current season the imports of rapeseed will slightly decrease, and total 30 thsd tonnes, as opposed to 34.2 thsd tonnes in 2016/17 MY.
At the same time, during several recent years there was not observed active interest in construction of new processing enterprises, due to the absence of object-orientated increasing of rapeseed harvest volumes in Russia, and high competition rates.
In the current conditions, in order to increase loading of the existing capacities, the Ministry of Agriculture proposed a special program for the annual growth of the areas under oilseeds by 700 thsd ha, in order to completely (100%) cover the demand of processing enterprises in raw materials by 2025.
Since the beginning of the current season, rapeseed prices varied very insignificantly. In most cases, the prices declined by nearly 1`000 RUR/t, due to sufficient supply of raw material, and the growth of purchasing prices in November and February developed due to reduction of the supply. In particular, in the Siberian District the supply on the domestic market significantly decreased, due to active interest in delivering of the oilseed to China at the higher prices.
By mid-February, the bid prices in the Central and Volga Districts usually varied within 20`500-23`000 RUR/t CPT, and in the Siberian District – 20`000-22`000 RUR/t CPT.
In terms of the increased harvest volumes, the current season provided a corresponding impact on rapeseed by-products. Due to the high harvest volumes and increasing needs of livestock and poultry farms (caused by the growth of cattle/poultry livestock), Ukraine increased almost all figures in the industry. According to APK-Inform forecasts, the production volumes will rise to a historical record level of 485 thsd tonnes of rapeseed oil (against 379 thsd tonnes in 2016/17 MY) and 651 thsd tonnes of rapeseed cake/meal (508 thsd tonnes in the previous season). Also, the domestic consumption of these by-products will increase and total 135 thsd tonnes (up 5 thsd tonnes) and 415 thsd tonnes (up 30 thsd tonnes), respectively.
According to APK-Inform estimations, in the current season there will be observed a growth of rapeseed oil exports, which can reach 340 thsd tonnes (up 85 thsd tonnes). So, high demand on the global market of rapeseed oil can contribute to further increasing of the export volumes of the Russian product, especially in terms of moderate trade with rapeseed oil and reduction of its prices on the domestic market. Norway, the Netherlands and Lithuania are the main export directions of the product supplying.
Since the beginning of the current season, sellers estimated the trade activity with rapeseed oil on the domestic market as low. Therefore, many oilseed processors preferred concluding long-term export contracts. The Siberian District mainly sold the oil to the Baltic States.
Also, changes of the national currency rates became one of the main factors affecting the trading policy, and development of the price dynamics. By mid-February, in the Central and Volga District the prices varied within 44`000-46`000 RUR/t EXW, and in the Siberian District – 39`000-41`000 RUR/t EXW.
The stable demand for rapeseed meal/cake in terms of the growth of cattle livestock and the growth of rapeseed production, contributed to increasing of the production by 28% in the current season. According to preliminary forecasts, the upward dynamics concerned the exports, which figures will break a record and total 225 thsd tonnes, as opposed to 126.5 thsd tonnes in the season-2016/17. Finland and Spain became the main countries-importers of rapeseed meal/cake from Russia.
Since the beginning of 2017/18 MY, prices for rapeseed cake faced oppositely directed trends. So, in the beginning of the season there was observed a drop in prices, due to a sufficient number of the product offers and low prices of the raw materials. Since early July to mid-November, the prices fell by nearly 4`750 RUR/t.
Since December until early February, an upward price trend dominated on the market due to rather high demand in terms of almost complete absence of available stocks at companies-producers. The prices increased by nearly 1000-3000 RUR/t and totaled 16`000-17`000 RUR/t EXW in the Central District, 15`000-18`000 RUR/t EXW in the Volga District, 15`500-17`000 RUR/t in the Siberian District on the same terms.
In the short term, the market of rapeseed will increase its purchasing prices, due to reduction in the number of offers from agrarians.
Prices for rapeseed oil will depend on the market situation of related vegetable oils, as well as RUR/USD exchange rates. At the same time, the market expects for active sales of the product in terms of stable demand.
The bullish trend for rapeseed cake will likely continue developing, due to rather high buying activity and upward trends for raw material prices. However, the interest in purchasing may even reduce, due to coming of offers of other oilseed cakes with low prices on the market, in particular sunflower cake.
According to preliminary estimations of the Ministry of Agriculture, in 2018/19 MY Russia will increase the areas under spring rapeseed by 20%, to 1.2 mln ha, which gives rise to optimistic forecasts about the harvest in 2018.
Anna Bulatova, APK-Inform Agency