Where exactly is the way forward for spring-sown rapeseed?

As of mid-October, the harvest of China's spring-sown rapeseed is nearing its end, with the harvest in the Inner Mongolia region basically complete, and the harvest progress in the northwestern production areas also approaching about 80%. However, constrained by the end of the national temporary storage price-support system, rapeseed from the above production areas has not only seen prices plummet, but the difficulty of shipping out goods has also increased significantly, which makes one inevitably ask: spring-sown rapeseed, where is its road ahead?

Price support abolished, subsidies undecided, local oil mills refuse to purchase

This year, China's rapeseed purchase and storage policy has been fully de-price-supported, and the spring-sown production areas are expected not to carry out price-support purchases. And so far, neither the national nor local governments have mentioned any rapeseed purchase subsidy plan or detailed rules, leaving local oil mills with a strong wait-and-see mentality. Objectively speaking, as early as 2013 the price and profit of spring-sown rapeseed were no longer considerable. The reason factories could keep running their presses was mostly that they were implementing the national temporary storage price-support policy, bearing relatively little risk themselves, and having a slight surplus at the annual settlement; but the end of the price-support policy this year will make factory crushing production face greater risk, especially since this year the domestic rapeseed oil and rapeseed meal markets have been exceptionally weak, and the possibility of oil mills suffering crushing losses is very high. According to this website's understanding, apart from Xinjiang (where rapeseed harvest progress is relatively slow), fewer than 10% of oil mills in the Inner Mongolia and northwestern rapeseed production areas are running. The refusal of purchasing entities to buy directly led to a sharp drop in local rapeseed prices. As of this week, the rapeseed price in Hulunbuir, Inner Mongolia, has fallen to as low as 1.73-1.75 yuan/jin, far below the 2.55 yuan/jin of the same period last year, a decline of 0.8 yuan/jin, comparable to winter-sown rapeseed in the Yangtze River Basin, which is staggering. In addition, according to feedback from local traders, a few local oil mills have entered the market to participate in raw material purchasing, but their deduction standards are exceptionally strict, basically buying below market price, and then reselling at the price at which they bought on the market, earning only the price difference from the deducted rapeseed, disrupting the local market and forcing traders to passively lower their shipping prices to seize the downstream market.

Demand in the Yangtze River Basin production areas is sluggish, spring-sown rapeseed shipments out are blocked

This year, the market for rapeseed-related products in the winter-sown production areas has been sluggish. Theoretically, colder weather would give some boost to the rapeseed oil market, but neither spot transactions nor market prices have shown much improvement, while the rapeseed meal market has plummeted with the end of aquaculture. To put it simply, "rapeseed oil is not prosperous in its peak season, and rapeseed meal is dismal in its off-season." Based on earlier forecasts of the product market, local oil mills mostly purchase raw materials cautiously. Apart from Sichuan, no single factory in the other provinces has purchased a total of more than 20,000 tons of rapeseed, and the maximum running production time is 2 months. And as the product market continues to deteriorate, it is only theoretically possible for oil mills in the above areas to resume operation, and the past phenomenon of spring-sown rapeseed being "shipped from the north to the south" is unlikely to reappear; and after the rapeseed subsidy in the Sichuan region ended, most local oil mills have shut down and are waiting to see, with reduced enthusiasm for purchasing raw materials, and local oil mills say that the rapeseed oil pressed from northwestern and Inner Mongolia rapeseed is darker in color and less fragrant than that from local rapeseed, so even if the price of the above rapeseed is lower than that of Sichuan's local rapeseed, the factories have little interest in purchasing.

Taken together, the author believes the later situation for spring-sown rapeseed comes down to two points: First, wait quietly for the purchase subsidy policy in the northwestern and Inner Mongolia production areas. The author guesses that in November the government is expected to issue related policies on rapeseed purchase subsidies, in order to protect the planting enthusiasm of farmers in the country's only double-low rapeseed production area. At present, local factory production profits are basically maintained at break-even. If raw material purchasing enjoys subsidies, factories will gain a certain profit margin, thereby stimulating their purchasing and production. Second, pin hopes on the Sichuan production area partially resuming production in November. This website speculates that factories in the Sichuan region will not completely shut down for holidays, and it is expected that some medium and large oil enterprises will resume operation in November, while local rapeseed raw materials are scarce, so oil mills may consider blending and pressing local rapeseed with northwestern rapeseed to adjust the color and fragrance of the rapeseed oil, which would to a certain extent drive demand for spring-sown rapeseed. But objectively speaking, both of the above points involve uncertainty, and the spring-sown rapeseed market currently still looks like walking on thin ice.