Production

Due to low profit and uncertainty over the government's support policy during the planting period, MY15/16 rapeseed production is forecast to fall slightly to 14.1 million tons, 2.1 percent from the previous year. MY15/16 forecast is based on a planted area of 7.4 MHa, down 1.3 percent over the previous year. According to MOA information, total MY15/16 winter planted rapeseed area was estimated at 7.03 million hectares, down 6.6 percent from the previous year. The agricultural bureau in Hubei, the largest rapeseed producing-province, expects the total planted area will be similar or fall slightly from the previous year. This is primarily due to an increased use of machinery which is reducing the need for labor inputs; and more stabilized yields. An industry survey shows that rapeseed profits in MY14/15 were RMB1,800/Ha, these are lower than wheat profits in Hubei and Hunan provinces. The government's late support policy announcement also impacted farmer's planting intentions. The rumored policy change to a "target price-based direct subsidy" was not enforced on rapeseed. However, it is unclear whether the existing "minimum price procurement" program will continue in MY15/16. The MY15/16 spring rapeseed area in the northwest provinces is generally stable. Growth of the MY15/16 crop is rated as normal due to common weather conditions.

China's government encourages rapeseed farming as it uses winter idle land and lessens the competition for land with other grain crops. Although the official production estimate shows a stable to growing trend, many Chinese industry sources observe that the official data appears too high. However, industry source do not have the ability to cover millions of households in many provinces to provide more reliable statistical data.

Trade

Rapeseed imports in MY15/16 are forecast to recover to 4.5 million tons from the estimated 4.1 million tons in MY14/15. Rapeseed imports hit a record 5.04 million tons in MY13/14 mainly driven by the recent rapid expansion of the crushing capacity particularly along the coastal provinces of Fujian, Guangdong and Guangxi. However, the skyrocketing imports in MY13/14 will be difficult to sustain in MY14/15 given the excessive supply of rapeseed meal and oil at lower prices resulted in negative crushing margins in most of 2014. In both MY14/15 and MY 15/16 rapeseed imports are expected to normalize and follow actual domestic consumption trends.

Crushing Capacity

CNGOIC estimates China's current rapeseed crushing capacity surpasses 40 million tons per year (some plants crush both rapeseed and soybeans), with a utilization rate of less than 40 percent. Guangdong, Guangxi and Fujian provinces have new crush plants which added 6 million tons of crushing capacity in 2014. These facilities primarily utilize imported rapeseeds. While this expansion contributed to the import peak in MY13/14, low prices for oil and meal will likely lower demand for a similar volume of imports in MY14/15 and MY15/16.

Policy

Government policies encourage rapeseed production through a "minimum price purchase program" and direct seed subsidy. In MY14/15, the government maintained the rapeseed purchase floor price at RMB5,100/ton (or $822/ton), unchanged from the previous year, but significantly higher (about RMB800 to 1,000/ton) than the price for imported rapeseed. The government's support policy is most likely to continue in MY15/16 and the floor price will likely not be lower than the previous year. Additionally, in MY15/16, farmers will continue to receive a seed subsidy of RBM150 ($24)/Ha.

Citing phytosanitary concerns, China's rapeseed import policy restricting entry to only non-rapeseed producing regions remains unchanged. However, the recent establishment of rapeseed crushing plants in non-rapeseed areas (namely Guangdong, Guangxi and Fujian provinces as stated above), has minimized this policy's impact on imports from China's two major suppliers, Canada and Australia. Additionally, AQSIQ has reached similar agreements with Russia and Mongolia on rapeseed imports for crushing. Again, low profitability of oil and meal will likely dampen incentives for unusually large rapeseed imports.

PSD Table

Country

China, Peoples Republic of

Commodity

Oilseed, Rapeseed (1000 tons;1000 Ha)

2013/14

2014/15

2015/16

USDA Official

Post Estimate New

USDA Official

Post Estimate New

USDA Official

Post Estimate New

Market Year Begin

10/2013

10/2014

10/2015

Area Planted

7,531

7,531

7,500

7,500

0

7,400

Area Harvested

7,531

7,531

7,500

7,500

0

7,400

Beginning Stocks

632

632

1,036

1,036

0

936

Production

14,458

14,458

14,700

14,400

0

14,100

MY Imports

5,046

5,046

3,750

4,100

0

4,500

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

20,136

20,136

19,486

19,536

0

19,536

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Crush

18,500

18,500

17,850

18,000

0

18,150

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

600

600

600

600

0

550

Total Dom. Cons.

19,100

19,100

18,450

18,600

0

18,700

Ending Stocks

1,036

1,036

1,036

936

0

836

Total Distribution

20,136

20,136

19,486

19,536

0

19,536

CY Imports

4,400

5,081

3,800

4,000

0

4,400

CY Imp. from U.S.

0

0

0

0

0

0

CY Exports

0

0

0

0

0

0

CY Exp. to U.S.

0

0

0

0

0

0