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Review & Outlook
Market Price of Rapeseeds will be Lower in This Summer
In 2001-2002, the market prices of rapeseed oil and rapeseed meal were relatively higher, which had earned good profit for oil crushers. Most crushers are preparing to process more rapeseeds. It is expected that more crushers will buy more rapeseeds from farmers this year. Although the demand side will place pressure on the market prices to rise, the effects form other related factors will be even stronger, which will lead a lower price in the summer. The followings are the major factors that will affect the market prices of rapeseeds and keep it lower:
1. The import of palm oil significantly increase
The total TRQ of palm oil in China in 2003 is 2.6 million metric tons (MMT). The new crop of soybean and soybean oil from South American will come to the market soon. The international market of edible oils has been flat. The war in the Middle Eastern has significantly reduced the purchase of palm oil by that area from the international market. Those factors have resulted in the continual decrease of market price of palm oil in the international market. Most Chinese oil importers think of it is the best time to import more palm oil. According to the information from the China Customs, some large volume of palm oil has been ordered and the several shipments have been arrived to Tianjing Xingang and Yantai Port in March. It is expected that more shipment will arrive to China in April and May, which will increase the supply of edible oil in the domestic market, and affect the increase of rapeseed price.
2. More soybean will be imported from South American
At the present, the import of soybean is increasing. It is projected that there would be 1.3 ¨C1.5 MMT soybean will arrive to Chinese port. Amongst it, 1.1MMT will be from USA and 0.2 MMT will be from South American. In May more soybean will arrive to the Chinese ports from South American. According to the latest news, the Chinese importers have ordered about 10 MMT soybean from Brazil and Argentina, which is 2 times hore than the real imported volume for South American in 2002. In addition to that, the cost of less than 2300 RMB per metric ton after paid tax and other costs will defiantly affect the market price of rapeseeds and rapeseed oil.
3. The import soybean oil is increasing
Based on the information from the China National Grain and Oil Information Centre, the annual soybean consumption in China is about 4 MMT with the imported soybean oil of 0.8-0.9 MMT. During the first quarter China has already ordered 0.85 MMT of soybean oil. It is expected that the total import of soybean oil in 2003 will be about 1.4-1.5 MMT. More import soybean oil will influence the domestic prices of oil seeds and oils.
4. Domestic production of rapeseeds will increase
Based ton the forecast of the China National Grain and Oil Information Centre, the total harvest areas of rapeseeds in China in 2003 will be 8.2 million ha., an increasing of 9.2% from 2002. Generally speaking, the weather condition in the rapeseed areas has been fairly good, which would result an better harvest than last year. It is estimated that the total production of rapeseeds will be 12.9 MMT, an increase of 27% from 2003. More domestic supply means the lower market price.
5. Rapeseed supply in the international market will significantly increase
Based on the forecast of the Canadian Canola Production Association the total output of Canola in 2003 would be 60% more than the output in 2002. The ABARE of Australia estimated that the total production of rapeseeds in Australia would be 2.03 MMT. The forecasts from other major rapeseed production areas are quite positive. The more supply in the international market could lead more import of rapeseeds and rapeseed oil to China, which would keep the market price of rapeseeds in China at a reasonable leavel
The above analyses have shown that the supplies in both domestic and international markets would not support the higher market price for rapeseeds in China in 2003. The demand side would be maintained at the similar as before. The farmers would not get higher purchase price for their new crop this summer.
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