Oilseed market adapts actively to achieve revitalization
This year the national temporary rapeseed storage policy was cancelled, and lacking government support, processing enterprises and growers are all in a state of confusion, with the new rapeseed purchase market sluggish. In addition, according to forecasts by the National Grain and Oils Information Center, in 2015 China's soybean planting area is 6.1 million hectares, an expected decrease of 700,000 hectares from last year, a decline of 10.3%. Rapeseed and soybeans are China's main oilseed crops, and after the adjustment of the purchase and storage policy, the market has fluctuated considerably.
Following the pilot implementation of the soybean target price subsidy policy last year in the three northeastern provinces, Inner Mongolia and other major soybean-producing areas, this year the temporary rapeseed storage policy has undergone another major adjustment. Starting this year, the main body responsible for rapeseed purchasing has shifted from the central government to local governments, which are responsible for organizing various enterprises to purchase rapeseed. Can this adjustment reverse the predicament of the domestic oilseed market?
Purchasing liberalized
Market enters a “period of pain”
The cancellation of the temporary storage policy is conducive in the long run to straightening out the price formation mechanism, but in the short term it may affect farmers' enthusiasm for planting
In the scorching summer, Wang Jinsong, chairman of the Tianzihe Agricultural Cooperative in Dali Village, Yangdian Township, Feidong County, Anhui Province, is worrying about selling the newly harvested rapeseed. In previous years the local rapeseed price was around 2.6 yuan per jin, and it was generally sold out by this time. After the new rapeseed purchase policy was introduced this year, the local rapeseed purchase price dropped to around 1.8 yuan per jin, and even at such a low price, no enterprise has come to buy. Feidong County is an important major rapeseed-producing area, with its rapeseed planting area reaching 800,000 mu in 2008; in recent years, affected by factors such as low planting returns and rising production costs, it has now dropped to around 500,000 mu.
Hubei Province is an important major rapeseed-producing area in China, and the sharp drop in rapeseed prices has led to a serious reluctance among farmers to sell. Liang Hongxing, chairman of Hubei Aoxing Grain and Oil Industry Co., Ltd., told reporters that they process more than 600 tons of rapeseed per day, but they have not yet entered the market to purchase; rapeseed has a short storage time, and it is estimated that farmers will sell rapeseed on a large scale in July, when they will begin purchasing.
In Heilongjiang, where the soybean target price subsidy policy is being implemented, soybean trading is currently sluggish. According to statistics from the Heilongjiang Soybean Industry Association, from the listing of new soybeans in October 2014 to April 10 this year, grain enterprises in Heilongjiang purchased 2.16 million tons of new soybeans, a decrease of 2.45 million tons from the same period last year, a decline of 53.15%.
Chen Yanjun, a senior analyst at the Zhengzhou Grain Wholesale Market, believes that rapeseed and soybeans are China's two main oilseed crops, and the current deadlock in trading is an inevitable phenomenon after the policy adjustment. The cancellation of the temporary storage policy is conducive in the long run to straightening out the price formation mechanism, but in the short term it may affect farmers' enthusiasm for planting, leading to a decline in planting area.
Chen Yanjun explained that the subsidy for planting soybeans in the Northeast region is basically around 500 yuan per ton, while the temporary storage price used to be 4,800 yuan per ton; farmers could only obtain the same returns as in previous years if they sold soybeans at no less than 4,300 yuan per ton. From the concentrated listing of soybeans last November to now, for most of the time the purchase price of food-grade soybeans in the Northeast has been between 4,000 yuan and 4,100 yuan per ton, and the purchase price of oil-grade soybeans has been between 3,200 and 3,400 yuan per ton, so the returns of farmers planting soybeans have fallen substantially.
This year's rapeseed purchasing situation is similar to that of soybeans. In Hubei and Anhui, the subsidy standard for planting rapeseed is 46 yuan to 48 yuan per mu; calculated on the basis of a per-mu yield of 300 jin, the subsidy level for rapeseed is around 320 yuan per ton. At present the purchase price of rapeseed by oil mills is around 3,400 yuan per ton; adding the subsidy, compared with last year's temporary storage purchase price of 5,100 yuan per ton, the returns of farmers planting rapeseed this year have fallen substantially.
Low planting returns are the fundamental reason for the decline in the planting area of domestic soybeans and rapeseed. It is understood that the implementation of the soybean target price subsidy policy has not stopped the downward trend in Heilongjiang's soybean planting area; this year Heilongjiang's soybean planting area fell by around 20%. It is expected that the rapeseed planting area may also decline next year. He Yongdong, head of the modern agricultural machinery cooperative in Anquan Village, Changsheng Township, Kedong County, Heilongjiang, said that their cooperative planted more than 20,000 mu of soybeans last year, and only more than 8,000 mu this year. Wang Jinsong said that their cooperative, by promoting the “one rice, one oil” planting model, has raised the level of mechanization for rapeseed, but if no strong subsidy policy is introduced, they will also reduce rapeseed planting next year.
Rapeseed is China's largest domestically produced oilseed crop, and the supply gap brought about by the decline in planting area and output will be filled by imported rapeseed, and the self-sufficiency rate will decline accordingly. The head of an oil processing enterprise in Jianli County, Hubei, said she is now very worried that if the rapeseed planting area and output continue to decline next year, it will bring very adverse effects on oil processing enterprises.