Russian market of rapeseed — waiting for new records

APK-Inform

 

2017/18 MY became a watershed point for the Russian market of rapeseed — the growth of production by more than 50% compared with the season-2016/17, provided the maximum export volumes of the oilseed for the whole contemporary history.

According to APK-Inform analysts, the new season-2018/19 MY may again break a record on the market of rapeseed and its by-products.

 

Rapeseed

Last season was rather effective for the Russian market of rapeseed, due to the growth of key performance indicators. First of all, Russia received the record harvest volumes (in clean weight) at the level of 1.5 mln tonnes (up 51%). Agrarians managed to reach such figures mainly due to increasing of the yield to 1.58 t/ha (up 43.6% compared with the season-2016/17), and the planted areas to 1.01 mln ha (up 2.8%).

The consumption of the oilseed increased to 1.27 mln tonnes (up 31%), including the processing for oil — 1.24 mln tonnes. In addition, the exports broke the record — 220 thsd tonnes, while in 2016/17 MY the figures totaled 65 thsd tonnes only.

According to APK-inform analysts, in 2018/19 MY Russia will reach another record, despite the adverse weather conditions during both the planting campaign of winter rapeseed and the further harvesting works. In particular, since mid-July 2018 heavy precipitations in the Central Federal District made difficult to realize the harvesting campaign in time. According to some market operators, the weather conditions may affect the qualitative characteristics of the oilseed.

"In our opinion, the current weather conditions will not have a serious negative impact on the general harvest of rapeseed. In any case, it will not be lower compared with the previous season. Heavy rains can bring some negative effect, because they can affect the acid value of rapeseed, and reduce the yield figures. And it will be possible to give the appropriate estimation in September only," said the Executive director of the Fat-and-Oil Union of Russia, Mikhail Maltsev to APK-Inform journalists.

According to the Ministry of Agriculture of Russia, as of August 23 Russian agrarians harvested rapeseed throughout the areas of 264.8 thsd ha, or 16.7% of the plan (in 2017 — 176.7 thsd ha), which is evidence that the harvesting campaign rates started stabilizing and even increased its terms. The production reached 490.5 thsd tonnes of the oilseed (385 thsd tonnes), with the yield at 1.85 t/ha (2.18 t/ha).

Generally, in season-2018/19 the planted areas under Russian rapeseed increased by 57.3% compared with the previous season level — to 1.58 mln ha. According to APK-Inform forecasts, the general harvest of the oilseed will reach the maximum volume ever, and reach 2.2 mln tonnes.

The Central and Siberian Federal Districts still remain the leaders in production of rapeseed. It should be noted that in the current season the Siberian District almost doubled the areas under rapeseed. The trend developed due to orientation of agrarians towards growing of more profitable crops, including rapeseed, as well as the growing demand for the oilseed on the foreign and domestic markets.

 

 

Also, in 2017 the Ministry of Agriculture of Russia announced its plans to work out the long-term program of development of the oilseed complex, which will focus on expansion of the planted areas under major crops (sunflower seed, soybeans, rapeseed). In April 2018, the First Deputy Minister of Agriculture, Jambulat Khatuov noted that for 5 recent years the fat-and-oil industry of Russia showed the stable growth rates, while the production capacities of domestic processing enterprises are loaded at 65% only, and the export potential is not fully realized. As for expansion of the planted areas under oilseeds, the First Deputy Minister reminded that the country can return at least 10 mln ha of unused agricultural lands to the turnover with the minimum investments, and another 10 mln ha after significant invested investments in land reclamation and clearance operations.

In 2018/19 MY, the oilseed exports can also break a record and reach 350 thsd tonnes (up 59% compared with last season), according to APK-Inform analysts. As a reminder, in the season-2017/18 Russia supplied the major volumes of rapeseed to China and Mongolia. So, in August-April of 2017/18 MY the oilseed exports to China totaled 96.8 thsd tonnes, and Mongolia — 71.9 thsd tonnes.

 

 

 

As for the domestic consumption of rapeseed in Russia in 2018/19 MY, the figures will grow by 41.7% compared with the last season level, to 1.8 mln tonnes. The figures will increase, due to the growing demand for the oilseed by-products on the domestic and foreign markets.

 

 

 

 

Market trends

In 2017/18 MY, the Russian market of rapeseed mainly faced rather high rates of trade-purchasing activity. The record harvest volumes of the oilseed allowed to most processing enterprises to work on the market in the first half of the season in more comfortable way, without the pressing need for raw materials, and form the required resource base for rather long period.

In the first half of last season, the prices of rapeseed somewhat decreased due to a sufficient number of offers, but then they started growing, as the oilseed stocks of agrarians reduced. By the end of 2017/18 MY (April-June), the market was low active, due to the deficit of oilseed raw materials.

In late June 2018, the Southern Federal District started the harvesting of campaign of new crop winter rapeseed. The starting offer prices varied within the range of 22`000-25`000 RUR/t EXW, against 22`000-23`000 RUR/t EXW in the previous season. The market faced the high competition rates among buyers, due to the fact that not only rapeseed processors were interested in the oilseed purchases, but also sunflower seed processors started showing the demand.

 

Rapeseed by-products

According to APK-Inform forecasts, in terms of the expected record harvest of rapeseed in 2018/19 MY Russian companies will also increase the production of rapeseed oil and meal/cake by 42.6% — to 705.6 thsd tonnes and 945.6 thsd tonnes, respectively.

According to preliminary estimations, in the new season the consumption of the reporting products will increase to 160 thsd tonnes (oil) and 580 thsd tonnes (meal/cake), against 150 thsd tonnes and 505 thsd tonnes in the season-2017/18, respectively.

 

Rapeseed oil

 

According to forecasts of the market experts, in the current season the high demand on the global market of rapeseed oil will contribute to the further increase of the export volumes of Russian rapeseed oil.

According to APK-Inform estimations, the figures can reach 530 thsd tonnes (up 200 thsd tonnes). As a reminder, in the season-2017/18 Norway, the Netherlands, Lithuania, Latvia and China were the main buyers of rapeseed oil from Russia. At the same time, the Netherlands and China significantly increased its purchasing volumes — up 6.4 and 4.8 times, respectively.

 

   

Importers of rapeseed oil from Russia for 2 recent seasons (August-April)

 

2016/17

2017/18

`000 tonnes

Share from the general exports, %

`000 tonnes

Share from the general exports, %

Norway

123,0

66,3

83,6

33,6

Lithuania

29,9

16,1

36,5

14,7

Latvia

17,9

9,7

36,4

14,6

Netherlands

6,6

3,6

42,1

16,9

China

5,5

3

26,1

10,5

Others

2,5

1,3

24

9,7

TOTAL

185,4

100

248,7

100

 

It should be noted that the sales volumes of Russian rapeseed oil on foreign markets are much higher than the domestic sales, due to a number of factors, including the attractive price situation of the export market, and low level of consumption inside the country.

The market participants generally estimated the trading activity on the domestic market of rapeseed oil in the season-2017/18 as moderate. The price range in the market segment was dependent on from seasonal factor and fluctuations of the national currency rates. As for the new season, in early July the starting offer prices for rapeseed oil made form the new crop oilseed appeared in the Southern District, and mainly varied within 44`000-46`000 RUR/t EXW. As a reminder, in the beginning of the season-2017/18 the prices mainly varied within the range of 42`000-43`000 RUR/t EXW.

 

Rapeseed meal/cake

In recent years, the strong demand for rapeseed meal/cake on the domestic market in terms of the growing cattle livestock, as well as the growing interest in purchases of the product from importers, contributed to the increase of the product production and exports. According to APK-Inform analysts, in the current season the consumption and exports of the product will also break another record for Russia, and reach 580 thsd tonnes (up 14.9%) and 350 thsd tonnes (up 233.3%), respectively.

Traditionally, Finland, Sweden and Denmark were the main buyers of Russian rapeseed cake and meal. At the same time, in August-April of 2017/18 MY Finland reduced the purchases in almost 1.75 times compared with the same period of the previous season, but the volume of supply to Sweden and Denmark remained unchanged. Also, last season Russia started exporting rapeseed meal/cake to such countries as Latvia, Spain, Iran, Turkey, the United Kingdom and Mongolia.

 

 

 

 

 

In 2017/18 MY the domestic market faced quite high demand for rapeseed meal/cake, in most cases the companies purchased the product under previously signed contracts. Also, it is worth noting that in the first half of last season the market faced some decline of prices in the segment, followed by the increase as the stock volumes started decreasing in the second half of 2017/18 MY.

In the Southern District, the first offer prices of rapeseed cake of the harvest-2018 were declared within 16`000-16`500 RUR/t EXW, against 19`500-22`000 RUR/t EXW in the beginning of last season. Then, since the second half of July 2018 the market participants noted the systematic decline of prices in the Southern and other neighboring Federal Districts.

 

Prospects

In the second half of August 2018, Russia will intensify the harvesting campaign of rapeseed in the Central Federal District, as well as start the works in the Siberian District. Therefore, the market expects for reduction of the purchasing prices for the oilseed.

Due to active demand rates from domestic rapeseed processors and the forecasted figures on the growth of the oilseed harvest volumes in 2018/19 MY, Russia will possibly increase the loading rates of oilseed processing capacities by more than 30%. In turn, it will contribute to development of the downward price trend in the segment of oilseed by-products. But taking into account the expected growth of rapeseed exports (in more than 2 times), the ruble bid prices will possibly increase, due to the high competition rates during purchasing of the raw materials. The global market will still make the major impact on pricing policy in the market segment.

 

Anna Bulatova, APK-Inform Agency