2019/20 MY was rather productive for Belarusian market of oilseeds, despite global economic turbulence, pandemic and political situation in the country. Belarus managed to reach several records in oilseed, like growth of processing volume to 1.37 mln tonnes (up 11% compared to 2018/19 MY).
Higher supply of oilseeds of the harvest-2020 allows keeping capacities massively loaded in 2020/21 MY.
Production vs import
Belarus produced 550 thsd tonnes of rapeseed in 2019/20 MY (up 21%). However, this crop was enough to cover only about one third of the overall processed volume.
Production of soybean and sunflower seed is rather low in Belarus and do not exceed 1% in the overall structure of oilseed crops. Negative experience or no experience at all are the main reasons for lack of interest to cultivation of sunflower seed and soybean in the country.
Thus, the import of oilseeds is important for Belarus and remains rather high. The country imported record 814 thsd tonnes of oilseeds in 2019/20 MY, up 3% compared to 2018/19 MY (791 thsd tonens).
Soybean was the main imported crop in 2019/20 MY. Its share reached record 68% in the overall structure of oilseeds import compared to 55% in 2018/19 MY.
Belarusian processors are increasing their interest to soybean in recent years thus its import is growing. Belarus imported record 556 thsd tonnes of soybean in 2019/20 MY, up by nearly one third compared to 2018/19 MY. The main volumes were imported in September-March (70%) with peak in March (87 thsd tonnes, record for this month).
Soybean import sharply declined from April onward due to significant decrease of Ukrainian soybean supply and raise of it prices as well as quarantine restrictions hurt Russian soybean export.
Ukraine was the main supplier of soybean to Belarus before 2018/19 MY. The situation changed in 2019/20 MY. Competition between processors and exporters sharply increased on Ukrainian soybean market in 2019/20 MY resulted in depletion of the oilseed stocks and growth of its prices. Russian soybean turned to be more price attractive for Belarusian importers. Supply of Russian soybean was sufficient due to better crop in 2019.
In April-August 2020, Russian soybean covered 50-93% of total import of the oilseed to Belarus. The share of Russian soybean reached 37% in the import structure in 2019/20 MY. Ukrainian soybean covered 63% only compared to 95% in the preceding season.
Belarus may reduce soybean import in 2020/21 MY on lower planted area in Ukraine (down 17% in 2020) that resulted in toughening of inner competition and price growth.
According to APK-Inform, Belarus will decreased soybean import by 10% to 500 thsd tonnes in 2020/21 MY.
Belarus cut rapeseed import by 35% to 200 thsd tonnes in 2019/20 MY amid high import of soybean. This volume was the second largest on record. The share of rapeseed in import structure of oilseeds decreased to 24% compared to 39% in 2018/19 MY.
The import reached its peak in September-October 2019. Traditionally, the share of Russian rapeseed reached 99% in the import structure.
We expect rapeseed import to remain at 190-205 thsd tonnes in 2020/21 MY. Supply of Russian rapeseed may decline amid deficit of sunflower seed in Russia after crop losses.
Belarus increased sunflower seed import by 6 thsd tonnes to 60 thsd tonnes only in 2019/20 MY amid higher attractiveness of soybean and rapeseed processing. At the same time, the demand for sunflower oil and meal is high in the country.
Share of sunflower seed import remained 7% in 2019/20 MY.
The peak of import was observed in October-March (80%). The import declined sharply in April-August due to restriction of Russian sunflower seed export. Russia is the main supplies of the oilseed to Belarus (98% in 2019/20 MY).
The further import of sunflower seeds to Belarus will be significantly restricted by the decline of the oilseed production in Black Sea region. However, considering the nonindustrial processing of sunflower seeds by Belarus plants (compared to consumption in Russia), the import of the oilseed in 2020/21 MY can slightly decline – to nearly 40-45 thsd tonnes according to our estimates.
Moreover, according to APK-Inform, in 2020 Belarus expects to increase the production of rapeseed – to 650-660 thsd tonnes (+19% to 2019, +43% to 2018).
Thus, the total volume of oilseeds imports to the country in 2020/21 MY can decline to 745 thsd tonnes, which is 8% lower compared to 2019/20 MY.
Processing is expected at the same level
The supply of Belarus oilseeds is still formed mainly by rapeseed – both of Belarus origin and imported oilseed. In 2019/20 MY rapeseed share totaled 54%. However, if we look at the supply of the oilseed in terms of its origin, than in 2019/20 MY for the second season in a row the imported oilseeds dominate Belarus market and their share totals 57% (61% previous season).
In 2020/1 MY tis tendency will preserve: the share of rapeseed (Belarus and import origin) in the total oilseeds supply on the market can amount to nearly 61%. The share of imported oilseeds (soybeans, rapeseed, sunflower seeds) we believe can slightly decline and total 52%.
The total supply of oilseeds in Belarus in 2020/21 MY can reach 1.43 mln tonnes, plus 1% to 2019/20 MY.
According to our estimated, the growth of oilseeds processing in a new season will not be high, taking into account that the new processing capacities in the country are not being introduced at this stage. Nevertheless, the processing can reach a record high of 1.37 mln tonnes which is less than 1% higher than the previous maximum in 2019/20 MY.
In terms of the main crops and their supply, rapeseed also is the main processed oilseed. Its share in the total processing in 2020/21 MY can rise to 60% from 55% last season, or to 820 thsd tonnes (+10% year-on-year).
The rapeseed by-products are of high demand on both domestic and export markets. At the same time, if rapeseed meal is mostly consumed domestically (nearly 60% of the total production), rapeseed oil is actively exported on the global market (nearly 90% of the production), mainly to Europe for biodiesel and feed production.
The share of soybeans processing in 2020/21 MY can decline by 37% compared to 40% last season. At the same time, we should note that the growing consumption of soybean meal on domestic and export markets will provide the stable demand of processors on soybean. Thus, the processing of this oilseed in physical terms can decreased slightly – to 510 thsd tonnes (-7% y-o-y).
At the same time, the share of sunflower seeds processing in 2020/21 MY can decline to multi-year low of 3% compared to 5% previous season. The low profitability of this oilseed processing on Belarus plants makes the by-products uncompetitive comparing to products of Ukrainian or Russian origin. As a result, the processing of sunflower seeds for the last 5 seasons ranges between 45-75 thsd tonnes depending on the price trends on the market.
Price trends
The global oilseeds market conjuncture together with the political situation in the country which stipulate the fluctuations in the foreign exchange market lead to the significant growth of oilseeds prices in Belarus.
Despite the fast harvest of rapeseed and the high production prospects, the cost of the oilseed in the country in August-September reached a record high. Depending on the regions, the bid prices varied within 850-950 Br/t EXW, and the offer prices often reached 970-980 Br/t EXW. in October the prices have stabilized some, however, despite the sufficient supply of rapeseed on the market, agriproducers are reluctant to lower the offer prices.
Similar price tendency can be observed in soybeans segment. However, taking into account nearly 100% import of the oilseed, this situation is caused by the disproportion of supply and demand of soybeans in Ukraine. By the end of October the bid prices for non-GMO soybeans reached 490 USD/t DAP.
It is not unlikely that with the growth of Russian soybeans supply on the market the prices on the market of soybean in Belarus will stabilize. Herewith, at this stage the price growth for oilseeds and byproducts remains.
In conclusion, we should note that in 2020/21 MY Belarus has all the reasons to preserve the record processing of oilseeds, despite the expected changes in import structure and possible shift in processing in favor of rapeseed.
However, taking into account the development of the oilseed market in the main supplying countries (Russia and Ukraine) our estimations of import and processing in Belarus can be corrected later. The evaluation will also depend on further development of price trends in Belarus and export markets of edible oils and meals.
Svetlana Kirichok,
APK-Inform analyst
