Summarizing results of 2015/16 MY for Russian rapeseed and products market we should note unfavorable situation: low rapeseed production and ruble devaluation affected trade activity. However, 2016/17 MY can be more favorable due to expected increase of the oilseed output by 8.6%. An article covers price trends, trade activity and prospects for Russian market of rapeseed of its products.
Rapeseed: balances & prices
Russia decreased rapeseed production in 2015/16 MY due to lower planted area and pronounced crop losses (12%). According to APK-Inform, the oilseed harvested area totaled 0.9 mln ha down 16% on year. Output declined by almost 25% to 1.01 mln tonnes. Lower production led to decline of rapeseed export to 35 thsd tonnes (-66.4% on year) while import increased to 4 thsd tonnes against 0.82 thsd tonnes in 2014/15 MY. To remind, according to WTO program export tax for oilseeds was lowered since September 1, 2015 and currently rapeseed export tariff is 6.5% but not lover than 11.4 EUR/t.
Demand for rapeseed from processors was high in 2015/16 MY due to limited supply. High competition resulted in purchasing prices increase that forced some crushers to stop activity until the new season. Mainly crushers processed rapeseed from stocks however, plants were underutilized. Price situation preserved in the current season.
Traditionally Southern FD started winter rapeseed harvesting in late June. Crop quality was good with oil content at 46-47%. High feedstock demand combine with limited supply at the beginning of the season stimulated farmers to rise offer prices from 23000 RUR/t СРТ to 26000 RUR/t СРТ against 22000-23000 RUR/t СРТ year ago.
Central FD started harvesting campaign at the end of the second ten days period of July. Supply was rather limited while demand was high at 25000-26000 RUR/t СРТ. Rains forced farmers to delay field works.
Processors of Siberian FD actively started to buy winter rapeseed in the second half of July. However, volumes offered did not exceed 60-100 tonnes. Purchasing prices mainly totaled 24000 RUR/t СРТ.
As of July 28, rapeseed was harvested throughout 58.2 thsd ha or 5.9% of the territory. Production reached 114.5 thsd tonnes with yield at 1.97 t/ha.
Rapeseed by-products
Rapeseed processing declined in 2015/16 due to lower production. Oil and meal/cake output totaled 364 thsd tonnes (447 thsd tonnes in 2014/15 MY) and 521 (641) thsd tonnes correspondingly.
Rapeseed oil exports declined significantly to 250 (337) thsd tonnes. At the same time, the oil imports decreased too to 1000 (1017) thsd tonnes.
Rapeseed meal/cake exports and imports declined to 215 (293) thsd tonnes and 250 (417) thsd tonnes correspondingly.
To remind, Rosselhoznadzor banned meal exports by railway through south-west, west and north-west border checkpoints since October 1, 2015. However, it have not influenced trade activity significantly.
Price trends on rapeseed oil market
Upward price trend dominated on rapeseed oil market in 2015/16 MY with some price stabilization in October-November and March-April. At the beginning of the season, selling prices mainly totaled 41000-44000 RUR/t EXW depending on region. By the end of June 2016, the prices reached 60000 RUR/t EXW in Central FD and 56000 RUR/t EXW in Siberian FD. The first lots of new crop rapeseed oil entered the market of Southern FD in the second ten day period of June. Selling prices mainly totaled 51000-53000 RUR/t EXW. Market operators informed about high sales rate.
In late July, single sellers in Siberian FD offered oil at 65000 RUR/t EXW however, the volumes at that price were low-scaled.
Majority of sellers in CFD informed about lowering of buying interest due to higher prices that resulting in decline of offer prices to 52000-54000 RUR/t EXW by late July.
Price trend on rapeseed cake market
The market had been seeing high trade activity during the season. Thus, processors mainly preferred to increase offer prices that raised from 16500-17200 to 18500-23000 RUR/t EXW depending on region.
New crop rapeseed cake entered the market in late June in Southern FD. Offer prices mainly totaled 17500-19000 RUR/t EXW and demand was high.
Supply in Siberian FD was very limited and selling prices were announced at 17000 RUR/t EXW.
Prospects
Higher demand for rapeseed and products stimulated increase of planted area to 1.08 mln ha (+5.4% on year).
Favorable weather during spring rapeseed vegetation can promote yield growth to 1.18 t/ha against 1.12 t/ha year ago. Production can reach 1.1 mln tonnes up 8.6% on year. However, higher crop could not fully load growing processing capacities. Thus, it could be hard for many crushers to form feedstock volumes.
There will be decline of rapeseed production in the world in 2016/17 MY due to lower planted area in China, EU and Ukraine as many farmers turn to more profitable crops such as sunflower and soybean.
Rapeseed exports can reach 70 thsd tonnes this season against 35 thsd tonnes year ago. Turkey and China are the main importers of Russian rapeseed within last 2 years.
Russia can increase rapeseed oil and meal/cake output due to higher oilseed crop. APK-Inform forecast oil production at 376 thsd tonnes (+3.5% to 2015/16 MY) and meal/cake output at 539 thsd tonnes (+3.5%).
The market of rapeseed oil can face upward price trend in short term due to high demand. However, currency rate and the oilseed crop volume will be the key factor of price formation.
Trade activity on meal/cake market should be high. Selling prices can decline due to sufficient supply.
Anna Bulatova, APK-Inform Agency
