December 13, 2011
The expansion of China's rapeseed crushing capacity coupled with a lower domestic harvest will lead China to boost imports of the oilseed next year, particularly from Canada, traders said.
More rapeseed imports would replace imports of oil and meal, which China increased last year after Beijing moved to restrict imports of Canadian canola - similar to rapeseed, since 2009.
"The expansion of crushing capacity could prompt the country to import over 2.5 million tonnes next year... and will also shift imports from rapeseed oil and meal to rapeseed," a trading manager with an international trading house said.
Fat crushing margins since October have prompted crushers to snap up supplies of Canadian canola over recent months, although margins over the past week have weakened, traders said.
"Margins have been as high as RMB500 yuan (US$79) per tonne for crushers, which have spurred purchases from Canada, where supplies have been snapped up by Chinese buyers," said one industry analyst with the China National Grain and Oils Information Centre (CNGOIC).
The centre expected China's imports in 2011-12 (June/May) to reach 1.8 million tonnes, up from 1.3 million tonnes the previous year.
In the first 10 months, China imported 17.6% more rapeseed meal, mainly from Canada and India. Imports of meal, used as ingredients for animal feed production, in 2010 surged 391% to 1.21 million tonnes.
In 2010, China's rapeseed oil rose 110% to 985,324 tonnes, while rapeseed imports fell 51% on-year to 1.6 million tonnes.
Large rapeseed imports could take market share away from soy, of which China is the world's top buyer. But the rapeseed trade is much smaller than soy, with China's annual imports at more than 50 million tonnes this year.
Chinese companies built or updated facilities in non-growing areas along the coastal areas after Beijing restricted imports of Canadian canola to the country's major rapeseed growing areas on concerns over blackleg disease since 2009.
Many of the facilities, located in Guangxi, Fujian, Shandong, Liaoning and Guangdong, started to operate this year. Total newly-added capacity is at more than 10,000 tonnes a day.
Canadian grain handler Viterra Inc's rapeseed facilities with annual capacity of 680,000 tonnes of canola in Guangxi's Fangchenggang started operations about two months ago, traders said.
COFCO Co Ltd, the country's largest grain trading house, has completed construction of four rapeseed plants in major growing areas, making it the largest processors in the country.
Officials at crushing plants said some of the facilities process not only rapeseed but also imported soy.
"There are not enough supplies to meet such large capacity expansion. Annual supplies from Canada to China would be a maximum of three million tonnes while there is little room for domestic output to rise," said the CNGOIC analyst.
"The planting acreage is not looking very optimistic again this season because of lower returns last year. Some farmers have abandoned plantings of the crop," analysts said.
The company expects rapeseed acreage to decrease by 6% to 7% in 2011-12 from the previous year. Farmers completed their plantings last month.
China's rapeseed output harvested early this year fell 4.5% at 12.5 million tonnes, according to CNGOIC data.