Rapeseed Market Develops Favorably After Government Ends Stockpiling

Marketization level rises, situation becomes clearer

Since June, trading volume in the Zhengzhou rapeseed futures market has grown rapidly. Rapeseed futures prices, which investors paid little attention to for many years, have now become data that oil mills and traders must check every day, while the rapeseed oil and rapeseed meal futures markets, which have always been relatively active, are even more “pursued” by investors.

Rapeseed, rapeseed oil and rapeseed meal spot and futures market mechanisms have become “alive”

“Without the constraints of the stockpiling policy, the rapeseed industry chain has ‘come alive’ like a surging river.” Huang Wei, senior agricultural product analyst at Meierjia Futures, told the Futures Daily reporter that various phenomena are now appearing one after another in the rapeseed, rapeseed meal and rapeseed oil markets, and all entities in the industry chain are observing and analyzing these new phenomena and new developments, and choosing the right moment to enter the market. According to the reporter's investigation, since the new-crop rapeseed came onto the market this year, the government has stopped stockpiling, which in the short term caused rapeseed purchase prices to decline, and “strange” phenomena such as farmers not selling and oil mills not buying appeared in the rapeseed market. However, in the long run, the continuous improvement of the degree of marketization will provide different market entities in the industry chain with more choices and more opportunities to enter the market, and some favorable market development trends are gradually taking shape.

At present, many large and medium-sized oil mills in Hunan and Hubei are slow to purchase because they consider new-crop rapeseed prices too high, but local small pressing oil mills and some traders from Yunnan, Guizhou and Sichuan are relatively active in purchasing. Rapeseed that was previously unable to circulate freely due to stockpiling policy constraints has regained its “free” status and can now circulate freely to other regions.

Yu Li, a grain and oil trader in Guangdong Province, believes that the current domestic rapeseed, rapeseed meal and rapeseed oil spot and futures markets are “relieved of a heavy burden,” and optimism is brewing. First, the end of the stockpiling policy has loosened the bonds on the market, so that rapeseed planting, rapeseed purchasing and processing, and the circulation and sales of rapeseed oil and rapeseed meal are no longer subject to administrative intervention; second, against the backdrop of sharp fluctuations in international and domestic financial markets, the intrinsic value of the rapeseed, rapeseed meal and rapeseed oil spot and futures markets has been reflected, and the bottom price range is becoming increasingly clear; third, time differences, regional differences, production and sales area differences, and quality differences in market prices have begun to appear, and the operating space and opportunities for all market entities have arrived; fourth, the processing of rapeseed and the sales situation of products are relatively optimistic, and market confidence in the outlook is fairly ample.

⟦NL> At large oil mills such as Xiamen Yinxiang, Dongguan Fuzhiyuan, Zhangzhou Chinatex, and feed mills under Guangdong Haid, the reporter saw large trucks from all over the country parked in full rows.

Demand in the rapeseed oil and rapeseed meal markets has entered a stable stage

At the Zhangzhou branch of Chinatex Grains and Oils (Dongguan) Co., Ltd., the reporter learned that compared with previous years, the company's rapeseed oil and rapeseed meal sales this year have been relatively stable, and the sales progress of the two has been relatively balanced. The phenomenon often seen in previous years of meal being strong and oil being weak, or oil being strong and meal being weak, has disappeared. A relevant person in charge of the company introduced that current domestic vegetable oil and meal prices are both in historically low price ranges. Although the narrowing price spread between rapeseed oil, rapeseed meal and their substitutes has weakened their cost-effectiveness advantages, rigid market demand is increasing. For example, the consumer group for rapeseed oil is steadily increasing, and aquatic product demand for rapeseed meal has not shown a major decline, while the lack of supply of miscellaneous meals such as cottonseed meal has freed up space for growth in rapeseed meal demand.

It was learned that in an earlier period, the price spread between soybean meal and rapeseed meal narrowed to a historical low. In many areas, such as the pig feed market and duck feed market, soybean meal began to replace rapeseed meal, which greatly reduced demand in the rapeseed meal market. The market was very worried about this, and some feed enterprises even expected that rapeseed meal would disappear from feed ingredients in the future.

However, judging from the overall market development trend of plant protein ingredients, the possibility of soybean meal completely replacing rapeseed meal is relatively small. The aforementioned person in charge said that as the price spread between the two gradually returns to around 550 yuan/tonne, rapeseed meal will instead replace a portion of soybean meal, and demand for rapeseed meal will increase. In addition, because the purchase price of seed cotton is too low, in the past two years the cotton planting area in inland areas such as Hubei, Shandong and Hebei has declined sharply, which has led to a cliff-like reduction in cottonseed output and ultimately insufficient supply of cottonseed meal, freeing up space for the expansion of rapeseed meal demand.

Compared with rapeseed meal, after the degree of market freedom increased, rapeseed oil has fared somewhat better. The main reason is that the decline in rapeseed purchase prices has straightened out the market price transmission mechanism, and the decline in production costs has driven down rapeseed oil sales prices, which is conducive to increasing market demand.

More importantly, without the stockpiling policy, there is no “distorted” rapeseed oil price. Quality differences in rapeseed oil will be reflected in price levels, and domestic residents who like to eat rapeseed oil will have the opportunity to choose rapeseed oil, which will also drive up demand for rapeseed oil.