Rapeseed prices this year may fall sharply compared with last year
It was learned from the 2015 National Summer Grain and Oil Purchase Work Conference held recently that this year's rapeseed purchase policy has been preliminarily clarified. The central government finance will provide subsidies for rapeseed purchases in 5 provinces, Jiangsu, Anhui, Henan, Hubei and Hunan. The specific purchase price and whether to purchase and store rapeseed oil will be determined by the provincial-level governments. This meeting was mainly for soliciting opinions, and the above 5 provinces were required to use provincial fiscal risk funds to subsidize the shortfall in purchase funds.
Relevant experts analyzed that this year is the first year of implementing the new policy, and the purchase price will be set by each province itself. There are two subsidy methods: one is to subsidize farmers, and the other is to subsidize oil processing enterprises. However, the introduction of specific rules still requires further waiting.
Yesterday, the reporter learned from Hunan and Hubei, the main rapeseed-producing areas, that the rapeseed harvest has basically ended. However, because the purchase price has fallen considerably compared with last year, farmers are unwilling to sell rapeseed and mostly remain in a wait-and-see state. Jiao Haolin, deputy general manager of Hubei Grain and Oil Group, told the reporter that the rapeseed harvest in Hubei is nearing its end. Affected by changes in the purchase policy, it is expected that the later rapeseed purchase price in Hubei will be 1.6—1.8 yuan/jin.
“At present, the rapeseed price is low, and the weather is also good, so farmers are not in a hurry to sell rapeseed after harvest. Earlier, the listed price of a certain oil mill in the Jingzhou area was 1.58 yuan/jin.” Xu Zhang, executive deputy general manager of Hubei Hongkai Industry and Trade Development Co., Ltd., predicted that each province still needs to discuss and study the matter, and purchase rules are unlikely to be issued in the near term. Oil mills are also currently taking a wait-and-see approach.
The reporter noted that the coverage of the newly issued rapeseed purchase subsidy policy this year has been greatly reduced, from the previous 13 provinces to only 5 main producing provinces: Jiangsu, Anhui, Henan, Hubei and Hunan.
“The purchase price will be determined by each province itself, and will no longer be uniformly priced by Sinograin. It is expected that the final purchase price will drop significantly from 2.55 yuan/jin in the previous two years. Even with government subsidies, the purchase price is very likely to be below 2.1 yuan/jin.” Xu Xiaoyan, an agricultural products researcher at Guohai Liangshi Futures, said that using the price of imported Canadian rapeseed as a reference, the recent duty-paid cost of Canadian rapeseed arriving at port is 3450 yuan/ton. Adding 150—200 yuan/ton in freight, the price is around 1.85 yuan/jin. If the domestic rapeseed purchase price is too high, it will lack competitiveness.
In addition, this year's rapeseed purchase policy currently mentions only subsidies, and in a way that combines provincial-level government funds with central government fiscal subsidies. It does not mention whether there will be market-support purchases.
“It is expected that local governments' enthusiasm for participating in purchases may be greatly reduced. Based on a rough calculation of China's 2014 purchase and storage of 5 million tons of rapeseed at a purchase and storage price of 2.55 yuan/jin, the government provided 25.5 billion yuan in funding support. Hubei Province accounts for about 15% of the national rapeseed planting area, and the funding support it received was about 3.8 billion yuan.” Chen Jing, an agricultural products analyst at CITIC Futures, told the reporter that this meeting revealed a subsidy of 226 million yuan for rapeseed purchases in Hubei Province. From this point of view, Hubei Province faces relatively great fiscal pressure. (Source: Futures Daily)
In Chen Jing's view, local governments are very likely to lower the guidance purchase price for rapeseed according to market conditions and reduce purchase volumes. In addition, given the sluggish downstream aquaculture this year, high national reserve stocks of rapeseed oil, and tight corporate funds, oil enterprises' enthusiasm for participating in purchases in various places will also be affected. It is expected that state-owned enterprises will make up most of the purchasing entities, while more enterprises will still wait for the relevant rules to be clarified before making arrangements, and there is also the possibility that they will not participate in purchases.
The above interviewees all believe that this year's opening purchase price for rapeseed will be significantly lower than last year. In addition, the new policy clearly increases the pressure on local finances. Taking Hubei Province as an example, it has already received 226 million yuan in central government fiscal subsidies. Calculated according to last year's rapeseed purchase and storage volume and price, Hubei is expected to need to provide 2 billion yuan. This is very likely to affect the strength of policy implementation in various places, thereby slowing the progress of rapeseed purchases this year, significantly reducing purchase and storage volumes, and delaying the time for opening purchases and market listing.