Increased rapeseed imports: uncertainty over rapeseed meal price rebound

Increased rapeseed imports put pressure on rapeseed meal

Statistics show that in October, China's rapeseed imports arriving at port totaled 187,000 tonnes, down 164% from 495,000 tonnes the previous month, but up 153.9% year on year from 737,000 tonnes in October last year. Current port inventory stands at 352,000 tonnes, up 40% month on month and up 89% year on year. Rapeseed oil imports arriving at port in October totaled 60,700 tonnes, up 197.5% from 20,400 tonnes the previous month, but down 37% year on year from 83,000 tonnes in October last year. Current port inventory stands at 132,800 tonnes, up 12.5% month on month.

From the above data it can be seen that this year's rapeseed imports have risen sharply compared with last year, as the domestic-international price inversion continues. Since October, the price gap between domestic and imported rapeseed arriving at port has been 1300-1500 yuan/tonne, about 500 yuan/tonne wider than the 800-1000 yuan/tonne of the same period last year. Although rapeseed oil imports have decreased, because domestic oil inventories are too large and the market expects arrivals to continue increasing later, any rebound in rapeseed meal will face a certain cap.

Weak rapeseed meal demand in December

Data from relevant institutions show that in October 2014, complete feed output was 425,500 tonnes, down 10.57% from 475,800 tonnes in September 2014 and still down 11.81% from 482,500 tonnes in October 2013. Large arrivals of US soybeans have already brought enormous pressure to the soybean meal market on the supply side; even with sluggish consumption in the oils market, soybean meal will struggle to see a bull market. As the winter storage period is now underway, feed enterprises mostly follow a buy-as-needed principle, and it is expected that from December until before the New Year, rapeseed meal demand will continue to shrink under the influence of ample soybean meal supply, so futures prices will also struggle to gain support.

Overall, if DDGS imports cannot enter the country smoothly in the fourth quarter, there will be support at the bottom for rapeseed meal; even if it weakens along with soybean meal, the 2000 yuan/tonne level will still provide support. But on the whole, rapeseed meal will maintain an oscillating trend, and 2200 yuan/tonne can be used as the dividing line for long-short operations, going long above and short below.