China Coastal Crushing Lines: Shifts From Soybean to Rapeseeds
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The daily crushing capacity of Rapeseed in China is 30,000-40,000 tons, and the annual production capacity exceeds 10 million tons. However, the actual domestic Rapeseed imports are two million-5 million tons. In the fourth quarter of 2022, the profit of Rapeseed crushing started showing promising signs, and 5 million tons of seeds for the new season of 2022/2023 have been purchased domestically. “Coastal Rapeseed crushing lines have switched from Soybean lines to Rapeseed crushing lines again, and the large Rapeseed crushing line has achieved reincarnation. Due to the continuous decline in domestic Rapeseed production, small domestic Rapeseed crushing capacity is seriously over capacitated”, analyst Tian Yaxiong from China Futures Co.Ltd said.
Zhou Jishuai, General Manager of the Oil business department of COFCO Oil & Fat Holdings Co., Ltd., introduced that since the fourth quarter of 2022, the import of vegetable Oil has resumed, and domestic vegetable Oil stocks have rebounded. The import volume and proportion of transgenic Rapeseed Oil represented by added Rapeseed Oil have dropped significantly. After the United States includes Rapeseed Oil as RD raw material, it is expected that the price of added vegetable Oil will be firm, and the profit of imports to China will continue to be inverted. In 2022/2023, the European Union, Russia, Australia, and other countries will likely have high Rapeseed yields. China’s Rapeseed Oil imports will shift to non-transitional vegetable Oils with higher cost performance.
The crushing volume of Rapeseed has increased, and the import of non-transformed vegetable Oil to Hong Kong has increased. The supply of Rapeseed Oil has increased, and the basis is close to the absolute low level; the price gap with Soybean Oil narrowed, and demand and market share is expected to return. The supply of sunflower Oil has recovered, and the demand for small packages is average. The uncertainty lies in the survival of Ukraine’s grain channel, Zhou Jishuai added.
As per the AgFlow data, China’s total Rapeseed import volume hit 2.1 million tons in January-May 2023. Canada (0.3 million tons) and Australia (30,000 tons) were crucial suppliers in May. The spot price difference between Soybean and Rapeseed Meals is 900-1000 yuan/ton, which is still cost-effective. During the loss-making period of pig farming, enterprises actively searched for low-priced miscellaneous Meal, and the time for replenishment of Rapeseed Meal was extended.
Rapeseed Meal Import in China
“The current demand for Rapeseed Meal depends on poultry and pig feed. However, as domestic Rapeseed continues to be squeezed in large quantities, the domestic supply of Rapeseed Meal will gradually become looser in the future, but the opening of the aquatic feeding season after Qingming also restricts the speed of Rapeseed Meal accumulation.” Tian Yaxiong explained.
Some people in the industry also believe that the increase in the import of vegetable Oil Meals in the past year was to make up for the reduction in the import of Rapeseed. It is a process of transferring profits overseas. However, this trend may reverse this year, and the global trade flow of Rapeseed is abundant. Sunflower Meal has the most significant increase in the demand side weight of domestic protein Meal, which may impact the demand for Rapeseed Meal.
Overall, the valuation of Rapeseed Meals is dependent on Soybean Meal. Tian Yaxiong said that from January to April 2023, Chinese Rapeseed import volume was expected to reach more than 2.4 million tons, and from January to April, it was estimated that 1.13 million tons of imported Rapeseed Meal would be crushed. A large number of them are concentrated in March-May. The import of Rapeseed Meal is the same as in the same period last year. From January to April 2023, it was forecast to import 630,000 tons, showing a trend of accumulation. It is expected that the domestic, commercial inventory of Rapeseed Meals will rise from 50,000 tons to 250,000 tons.
Other sources: CNFIN
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