Russian market of rapeseed: growth of production
In the current season, the Russian market of rapeseed demonstrated quite interesting and dynamic development. The record volumes of the oilseed production increased the interest of crop processors and exporters in its purchases, as well as increased the competition trends in the market segment, which had its impact on the price dynamics. In addition, building of rapeseed supply channels in the direction of China and Belarus contributed to the further development of the market segment. The current article focused on more detailed information about the main trends on the Russian rapeseed market.
Rather attractive price situation and the persistently high demand from companies-processors for rapeseed, and decreasing of the export duties to 6.5% from the part of companies-exporters, contributed to the constant growing of the planted areas under the oilseed.
Thus, in the current season Russia increased the planted areas under the oilseed to the record figure of 1.58 mln ha, up 57% compared with the figures of 2017/18 MY. The trend contributed to formation of the record rapeseed harvest of 1.98 mln tonnes (up 31%), despite some reduction of the yield (down 16% compared with the season-2017/18), due to the adverse weather conditions during the ripening period.
We should note that the Siberian Federal District demonstrated the most significant increase of the harvest volumes, where the planted areas almost doubled, which allowed to the District to take the leadership in rapeseed production in Russia. The region managed to increase the production of rapeseed, due to the new opportunities for the exports, especially to China. But the tightened control of food imports by the Chinese government agencies can slow down the expected significant increase in supplies. Nevertheless, in the current season China is still the leader in the purchases of Russian rapeseed. In August-December, China covered 63% of all foreign supplies, and in December 2018 — 72% of the supplies, due to the significant increase in the oilseed exports (up 67% compared with the figures in December 2017).
In turn, the active exports formed the high profitability of the oilseed, which stimulated the further development of the market segment. According to APK-Inform forecasts, in the current season Russia will supply 230 thsd tonnes of the oilseed on foreign markets, down 1% compared with the figures in 2017/18 MY. In terms of the significantly increased interest of China and Belarus in Russian rapeseed, the reporting estimations can even increase in the nearest months.
In particular, in August-December within the Customs Union Russia supplied 157 thsd tonnes of rapeseed to Belarus. It should be noted that Belarus continues increasing the oilseed purchases for the second running season, due to launching of a new plant of Sodrugestvo Group of Companies for oilseeds processing in Smorgon.
In the beginning of 2018/19 MY, the significant increase in the production volumes of rapeseed and formation of the record volume of total supply brought some pressure on the prices. At the same time, trading and purchasing activity rates were rather high.
In December 2018, the prices started growing, due to reduction of rapeseed stocks in the Central and Volga Districts. Therefore, many processing plants shifted to purchasing of rapeseed from the Siberian Federal District, where the upward price trend due to the increased demand rates in December-January. Since the beginning of the season, the prices in the reporting region increased by nearly 3`200-4`400 RUR/t.
According to estimations of many processors, active purchases of rapeseed in the beginning of 2018/19 MY allowed forming the sufficient stocks for work for the whole season.
The stable high demand for rapeseed by-products on both the domestic market and from importers supported the high interest in the processing of rapeseed.
In the current season, Russia will significantly increase the domestic processing volumes of rapeseed for oil, which are estimated at 1.7 mln tonnes, up 39% compared with last year. It is expected that the domestic consumption of rapeseed oil will increase by 14%, and rapeseed meal and cake — up 23%.
The export segment of rapeseed oil will demonstrate the largest increase (up 51%). According to APK-Inform estimations, for five months of the current season the exports of rapeseed oil already totaled 260 thsd tonnes, against 152 thsd tonnes in the same period last season. In August-December of 2018, Norway, Latvia and China were the main buyers of rapeseed oil from Russia, which purchased 190 thsd tonnes of the product in total, against 103 thsd tonnes in the same period last season, when the TOP-3 included Norway, the Netherlands and Lithuania. However, in the current season the Netherlands and Lithuania purchased rather small-scale volumes, and lost their leading positions among the importers.
In most cases, Russia sold rapeseed oil under the previously concluded long-term foreign economic contracts, as a result the market was characterized mainly with the stable price situation. The producers of the Siberian District sold rapeseed oil to the Baltic states and China.
Also, the export operations of rapeseed meal/cake demonstrated the positive dynamics. For the first five months of the current season, the exports totaled 124.4 thsd tonnes, against 71.7 thsd tonnes in the same period of the previous season.
Finland, Latvia and Sweden were the main countries-importers of rapeseed meal/cake, which purchased 88 thsd tonnes of the product in total.
Since the beginning of the current season, in the Central District there was observed some decrease of prices for rapeseed cake, due to the growth of number of product offers on the market. In other regions, the price situation was mainly stable. The demand rates for the products were estimated as high, and the sales were provided through the previously established sales channels. After the period of New Year holidays, the market segment demonstrated the significant increase in prices, due to reduction of the oilseed processing volumes and decreasing of the number of offers on the market of rapeseed by-products. At the same time, the producers did not face any problems with the sales, and the trading rates at the announced prices were estimated as moderate.
In the second half of the current MY, the market of rapeseed will face the increase of prices, due to the active processing and export operations in the beginning of the season, which led to intensive reduction of the carry-over stocks. At the same time, it is expected that the trading activity rates on the domestic market will reduce, due to the complete formation of the raw materials at many enterprises before the end of the season.
It is expected that in the second half year, the trading activity of rapeseed oil will remain quite high, as sellers reported about conclusion of the long-term contracts.
In the market segment of rapeseed meal/cake, the price will increase, due to the same market conditions on the raw material market, which at the same time, can become leveled down by the decrease in purchasing activity. Also, the buyers can even reorient to the cheaper sunflower meal/cake.
Anna Bulatova, APK-Inform Agency
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