Domestic rapeseed gradually loses market share, may be dominated by the international market
Currently, the Yangtze River basin is in the peak season for the market release of newly harvested rapeseed. In previous years at this time, farmers growing rapeseed, oil mills purchasing rapeseed and traders would be bustling with activity: farmers actively selling, while oil mills and traders scrambled to buy up the newly harvested rapeseed, and newly pressed rapeseed oil and rapeseed meal had also begun to be supplied to the market in large quantities. But this year, the rapeseed purchasing market in the Yangtze River basin has been quiet and deserted, with farmers not selling and oil mills not buying becoming a common phenomenon, and newly produced rapeseed oil and rapeseed meal nowhere to be found. In particular, the "aquaculture market rally" that the rapeseed meal market saw at the same time in previous years has also disappeared.
Domestic rapeseed output shows an obvious downward trend
A reporter learned from investigations in the main rapeseed-producing areas of the Yangtze River basin that this year the overall downward trend in total rapeseed output in the producing areas remains fairly obvious. Although favorable weather in the producing areas this year helped raise yields per unit area, total rapeseed output still declined because the rapeseed planting area fell considerably.
Market participants told the reporter that there are many reasons for the reduction in the domestic rapeseed planting area. The main reason is that farmers do not make money growing rapeseed, and it also requires a relatively large input of labor. In addition, the inability to achieve mechanized operation in rapeseed planting and harvesting has also reduced farmers' enthusiasm for planting.
It is understood that in recent years, in order to increase farmers' enthusiasm for growing rapeseed, the government implemented a price-support purchasing policy in Hubei and other main producing areas, raising the rapeseed purchase price to as high as 2.55 yuan/jin. But compared with the income from growing wheat and other crops, growing rapeseed still brings in about 150 yuan less per mu. At present, apart from growing some rapeseed to ensure their own oil needs, some farmers in the producing areas basically no longer grow extra rapeseed.
It is understood that rapeseed cultivation still retains a primitive production model: land preparation——seedling raising——transplanting——irrigation——harvesting, a series of steps still mainly completed by manual labor. At present, the vast majority of young and middle-aged laborers in rural areas have gone out to work. With a labor shortage and continuously rising wages, rapeseed cultivation, which requires much labor and has a complicated production process, naturally lacks appeal for farmers.
When visiting the producing areas, the reporter also found that the rapeseed-producing areas are mostly hilly terrain and also have many paddy fields, which has kept the cost of rapeseed cultivation persistently high and is also unfavorable for large-scale rapeseed cultivation.
Because rapeseed cultivation requires large inputs and yields poor returns, farmers in the producing areas are now keen on "switching from rapeseed to wheat," "switching from rapeseed to vegetables," "switching from rapeseed to lotus," and so on. Wheat in particular not only brings higher income but is also basically all mechanized.
Major policy adjustment, the domestic rapeseed industry chain will gradually disappear
This year, the price-support purchasing policy for rapeseed in the main producing areas is no longer being implemented. Instead, a purchase subsidy policy has taken its place, with the specific purchase price and subsidy rules to be decided by local governments. The rapeseed market has begun to move from a "policy market" to a "market-driven market." With no government price-support purchasing, what new situations will emerge in the domestic rapeseed industry chain?
Guangdong rapeseed processor Yu Li told the reporter that, judging from the current market development trend, after the major change in the rapeseed purchasing and storage policy, the market will mainly see the following situations: First, the purchasing and storage policy handed over to local governments this year and beyond will definitely not be sustainable, because local governments do not have sufficient financial resources to complete the purchasing and storage task. Second, the domestic rapeseed industry chain will basically become market-oriented, and market prices will mainly be affected by market supply and demand. Third, in the first year of the new policy, all parties in the market are taking a wait-and-see attitude, the purchasing period for newly harvested rapeseed will be extended, and the large-scale market release of newly produced rapeseed oil and rapeseed meal will be delayed. Fourth, without government support at the bottom, prices of the three products in the domestic rapeseed industry chain will move lower, and phenomena such as farmers holding back sales and oil mills and traders not buying will be very normal. Fifth, because income from growing rapeseed has declined, the rapeseed planting area in the main producing areas will inevitably fall sharply in the new crop year, and domestic rapeseed and domestic soybeans will become "fellow sufferers." Sixth, in the long run, domestic supply of rapeseed, rapeseed oil, and rapeseed meal will tighten, and prices may rebound.
According to the reporter's understanding, after this year's newly harvested rapeseed came onto the market, because there was no government price-support purchasing, market prices opened low and moved lower. In Hubei and other places, the purchase price of newly harvested rapeseed once fell to 1.6 yuan/jin, nearly 1 yuan/jin lower than last year's government price-support purchase price, causing most farmers to hold back sales. At the same time, because they were unsure about the later trend, oil mills and traders did not dare to rush into the market to purchase, and thus the strange situation arose of farmers not selling and oil mills not buying.
Recently, the purchase price of newly harvested rapeseed in the main producing areas has rebounded to around 2 yuan/jin. The main market purchasers are some large oil mills, traders, and traditional press oil mills, while small and medium-sized oil mills and traders are still waiting and watching.
"Farmers are becoming less and less interested in growing rapeseed, and in the new crop year farmers are more likely to choose to grow wheat." Sun Wei, general manager of the trading branch of Chinatex Agriculture Hubei Co., Ltd., believes that although the purchase price of newly harvested rapeseed has recently shown signs of warming, it is still 0.5 yuan per jin lower than last year's market purchase price, making rapeseed cultivation very unprofitable for farmers.
Judging from the overall market development trend, this year's major adjustment to the rapeseed purchasing and storage policy has only accelerated the decline of domestic rapeseed, while poor returns from rapeseed cultivation and the inability to carry out large-scale cultivation are the main reasons for the decline in domestic rapeseed output. More importantly, in recent years imported rapeseed, rapeseed oil, and rapeseed meal, along with soybeans, soybean oil, and others, have poured in in large quantities, not only causing domestic vegetable oil and meal prices to fall sharply, but also crowding out the market share of the domestic rapeseed industry chain, making it difficult for industry chain enterprises such as oil mills to survive.
International market prices will dominate domestic prices in the future
Yu Li believes that as domestic rapeseed output declines year by year, the output of domestic rapeseed oil and rapeseed meal will also continue to fall. The market position of domestic rapeseed and its products relative to imported rapeseed and its products will undergo a major reversal, and imported rapeseed and its products will occupy a dominant market position.
According to the reporter's understanding, in recent years many new oil mills have been built in China's coastal areas, mainly crushing imported soybeans and rapeseed. Most of the imported rapeseed products crushed there——genetically modified rapeseed oil and rapeseed meal——are sold outside China's main rapeseed-producing areas. But as domestic rapeseed output becomes smaller and smaller, the impact of imported rapeseed and its products on the domestic rapeseed industry chain has become increasingly obvious, and has already penetrated into China's main rapeseed-producing areas. Although the government currently still does not allow oil mills in the main producing areas to crush imported rapeseed, and it mainly enters in the form of finished products, market participants believe that further changes may occur in the future.
It is understood that residents in rapeseed-producing areas such as the Yangtze River basin are accustomed to consuming rapeseed oil, and local aquaculture is also relatively developed, while rapeseed meal is a major raw material for aquaculture feed. After the domestic rapeseed industry gradually disappears, the market expects that imported rapeseed and its products will eventually enter the producing area markets.
With regard to related products such as soybean oil and soybean meal, market participants believe that the absence of the domestic rapeseed industry will provide them with a certain space for market development, and in the long term will also provide bullish support for the prices of these products. This market effect will be even more obvious when international rapeseed output also declines.
As for the domestic rapeseed and its product market, market participants believe that the shortage of supply in the short term will not have too great an impact on market prices. But in the long term, first, the price of domestic rapeseed oil, known as "Oriental olive oil," will rise, and the development space for traditional press oil mills in the producing areas will be opened up, but they will face the problem of raw material shortages. Second, the market influence of the domestic rapeseed industry will become smaller and smaller. The fact that this year's rapeseed meal "aquaculture market rally" has not started for a long time is clear evidence of this, and this year's delayed market release of newly pressed rapeseed oil and rapeseed meal has also not had too great an impact on the market. Finally, domestic rapeseed oil and rapeseed meal market prices will in the future be increasingly affected by rises and falls in international oilseed market prices, and increases or decreases in the output of major rapeseed-supplying countries in the international market will directly have a major impact on the domestic market.