China's rapeseed imports enter a period of high rigid demand

The temporary inspection and quarantine measures implemented starting in 2009 meant that subsequent imported rapeseed could only enter a small number of China's coastal port areas, while its enormous advantages in price, cost, quality and supply in turn caused the imported rapeseed processing capacity in China's coastal areas to grow rapidly.

China enters a period of "high rigid demand" for imported rapeseed

Annual rapeseed imports may remain at a high level

Since China's commodity inspection authorities implemented temporary inspection and quarantine measures in 2009, imported rapeseed has in practice been able to enter only a small number of China's coastal non-main-producing areas, and only in a restricted manner. Although a few areas such as Jiangsu later joined the pilot program with their oil mills, the overall scope remained very limited, which changed the previous supply pattern of China's rapeseed meal and related markets.

However, because crops from countries such as Canada and Australia have advantages in quality and supply, and because of the import price advantage created by the temporary storage purchase policy for domestic rapeseed, China's imported rapeseed processing capacity "thrived" under comparative benefit, especially in the main producing provinces of China's aquatic feed industry, where the demand advantage for rapeseed meal is obvious.

With the renewed expansion of processing capacity in 2014, as well as the improvement of China's financial markets related to rapeseed varieties and the improvement of corporate profit models, China has already entered a period of "high rigid demand" for imported rapeseed. Not only may the import volume in 2014 reach a record high of more than 5 million tonnes, but afterwards, as long as no major restrictive changes occur in import policy and no significant decline occurs in the output of major international producing countries, China's annual import volume will remain at a relatively high level.

Imported rapeseed crushing capacity expands substantially

After 9 November 2009, because China's commodity inspection authorities detected the rapeseed stem base canker pathogen in imported rapeseed, the rapeseed import policy underwent a fundamental change, and rapeseed could enter customs only in 7 non-producing areas, namely Hainan, Guangdong, Guangxi, Fujian, Hebei, Liaoning and Tianjin, and had to be processed locally and could not be resold. At that time, among the above 7 provinces, municipalities and autonomous regions, only two had processing capacity: Dongguan Fuzhiyuan in Guangdong and Kerry in Yingkou, Liaoning.

⟦NL> Afterwards, as the benefit advantages, quality advantages, market advantages and supply advantages of imported rapeseed became prominent, retrofitting and newly built capacity expanded substantially. The Chinese government also allowed Jiangsu to pilot imports of Australian rapeseed and Canadian rapeseed in 2013 and 2014 respectively. By the end of 2014, JCI statistics showed that the total capacity of enterprises that actually imported and processed rapeseed that year reached 23,700 tonnes/day, almost 6 times that when the restrictive rapeseed import policy began to be implemented. Among them, Guangxi Fangchenggang Aojia Grain and Oil Industry Co., Ltd. was a newly commissioned enterprise in 2014.

The processing benefit advantage of imported rapeseed is obvious

After China implemented the temporary storage policy for rapeseed in 2008, the cost of domestic rapeseed in the Yangtze River Basin climbed almost every year, while the price of internationally traded rapeseed, which operated fully on the market, thus gained a price advantage, and this also led China's domestic rapeseed processing industry in the Yangtze River Basin into difficulties. By contrast, the processing benefit of imported rapeseed in coastal areas was clearly better than the processing benefit level of domestic rapeseed, and on several occasions huge and generous profits of more than 500 yuan/tonne appeared.

The quality of the rapeseed meal produced is even comprehensively leading

Not only does it hold an obvious advantage in cost, but in terms of quality and varieties, imported rapeseed is likewise superior. The average oil content of Australian rapeseed is 42.4%, and the average oil content of Canadian rapeseed is also above 42%. In addition, the maximum impurity content of Canadian and Australian rapeseed is 4% and 3% respectively. In contrast, China's annual temporary storage purchase uses the national standard third-grade quality requirements, with standards of oil content greater than 38% (including 38%), moisture within 8%, and impurities within 3%. The quality of rapeseed meal, an important downstream product of Chinese rapeseed and imported rapeseed, shows an even more obvious gap.