China’s Rapeseed Meal Imports Rise as Seed Imports Decline

Changing dynamics in China’s rapeseed market have resulted in a slowing of rapeseed imports and a hastening of rapeseed meal purchases in CY2016. In the first quarter of MY2016/17 alone, China rapeseed meal imports have reached 150,000 tons, mostly from Canada, compared to 5,000 tons in Q1 of MY2015/16. In comparison, rapeseed imports in the first quarter of MY 2016/17 came in around 600,000 tons, which is a 40 percent decrease from the same time period in MY2015/16.

Uncertainty over possible import restrictions, higher prices relative to competing oilseeds, and the availability of domestic stocks have contributed toward China’s slowdown of rapeseed imports. Additionally, the ongoing auction of rapeseed oil state reserves, which has reached 1.3 million tons since October 2016, has also dampened the demand for imported rapeseed. Also, growing demand from the livestock sector, combined with a lower rapeseed production and crush, has constrained local supplies of rapeseed meal. This has heightened the demand for imported meal, with imports soaring over 300 percent to more than half a million tons over the past 12 months. On an October/September marketing year basis, rapeseed imports remain depressed at a 5-year low, with October 2016 - January 2017 arrivals estimated at 850,000 tons. This trend toward lower rapeseed imports and higher purchases of rapeseed meal is expected to continue through MY2016/17 (Oct-Sep), supporting USDA’s forecast of China rapeseed imports at 3.6 million tons.

In contrast, China’s soybean imports from October 2016 to December 2016 came in healthy around 22.0 million tons, slightly outpacing the first quarter of MY2015/16 (Oct-Sep basis). Soybean crush between October 2016 and December 2016 also rose to 22.4 million tons, a 5 percent increase over the same time last year, satisfying strong demand for protein feed and offsetting reductions in DDGS imports and lower rapeseed meal production.

OVERVIEW

Global oilseed production is forecast slightly lower this month. Soybean production is lower with reductions for Argentina and Bolivia more than offsetting a larger forecast for Ukraine. Sunflowerseed production is up on higher forecasts for Ukraine, EU, and Kazakhstan. Global soybean imports are projected lower this month on weaker demand from Turkey, while exports are up slightly on a larger forecast for Ukraine. Global soybean stocks are down this month, led by Argentina. The U.S. season-average farm price is unchanged at $9.50 per bushel.

SOYBEAN PRICES

U.S. export bids in January, FOB Gulf, averaged $400/ton, up $5 from last month.

For the week ending February 2, U.S. 2016/17 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 33.5 million tons compared to 25.8 million a year ago. Total commitments to the world are 51.0 million tons, compared to 41.5 million for the same period last year.

2016/17 TRADE OUTLOOK CHANGES

  • United States rapeseed oil imports are up 158,000 tons to 2.0 million, on a stronger trade pace.
  • Argentina
    • Soybean meal exports are raised 100,000 tons to 32.4 million on greater exportable supplies.
    • Sunflowerseed exports are up 100,000 tons to 218,000 on strong trade pace and growing demand in the EU.
  • Bolivia soybean meal exports are cut 130,000 tons to 1.4 million following lower soybean production forecasts for both 2016 and 2017.
  • Burma palm oil imports are down 100,000 tons to 800,000, in line with past trade trends.
  • Canada rapeseed exports are raised 300,000 tons to 9.8 million on the strong pace of trade to date.
  • European Union
    • Rapeseed imports are up 200,000 tons to 3.7 million reflecting the pace of trade and strong crush demand.
    • Rapeseed meal imports are revised downward 100,000 tons to 300,000, and rapeseed oil imports are cut 100,000 tons to 200,000 reflecting growing domestic output.
    • Sunflowerseed imports are raised 100,000 tons to 500,000 on a stronger pace of trade during first 4 months of the marketing year.
  • Philippines soybean meal imports are cut 100,000 tons to 2.7 million in line with past trade trends.
  • Russia soybean meal imports are down 100,000 tons to 450,000 on a slower pace of trade during the first quarter of the marketing year.
  • Turkey soybean imports are lowered 100,000 tons to 2.1 million while soybean meal imports are raised 100,000 tons to 700,000 on trade trends.
  • Ukraine
    • Sunflowerseed meal and oil exports are both raised 100,000 tons to 4.8 million and 5.1 million, respectively, on a larger crush following an improved sunflowerseed production forecast.
    • Soybean exports are up 250,000 tons to 2.6 million on a higher crop. 2015/16

TRADE CHANGES (select countries – based on trade data)

  • Bolivia soybean meal exports are reduced 250,000 tons to 1.7 million.
  • Burma palm oil imports are down 111,000 tons to 739,000.
  • Pakistan palm oil imports are cut 100,000 tons to 2.7 million.
  • Paraguay soybean exports are up 100,000 tons to 5.4 million, and soybean meal exports are down 100,000 tons to 2.6 million.
  • Philippines soybean meal imports are reduced by 161,000 tons to 2.5 million
  • Vietnam soybean meal imports are raised 295,000 to 5.0 million.