June 8, 2012

 

China raises rapeseed purchase cost by almost 9%

 

 

The government of China will increase its rapeseed buying price by 8.7% for 2012 and maintain to stock the oilseed to protect farmers' profit margins and boost local production, two traders said Thursday (June 7).

 

The government will pay RMB5,000 (US$792) a tonne compared with last year's RMB4,600/tonne (US$726.97), one of the traders told Dow Jones Newswires.

 

The National Development and Reform Commission, China's top economic planner, will release an official statement on the purchase in the next few days, another trader said, adding that the target volume was set at five million tonnes.

 

The government has gradually raised the purchase prices of grains, oilseeds and cotton to encourage domestic production.

 

The 2011 price for rapeseed was 18% higher from the previous year. Last year, China's state stockpiler bought soy at RMB4,000/tonne (US$632.15), up 5% from 2010.

 

The benchmark September rapeseed oil contract on the Zhengzhou Commodity Exchange rose for a third consecutive day Thursday (June 7), closing 1.2% higher at RMB10,592/tonne (US$1,673.93), down from an intraday high of RMB10,976/tonne (US$1,734.62).

 

"Rapeseed oil prices have scope to rise even further, up to RMB11,000/tonne (US$1,738)," an analyst with a Wuhan-based futures firm said.

 

Falling domestic output and higher prices will likely boost the oilseed's imports to more than two million tonnes in 2012 compared with 1.26 million tonnes in 2011, the state-backed China National Grain & Oils Information Center said earlier.

 

CNGOIC earlier put China 2012 rapeseed output at 12.8 million tonnes, down 1.5%.

 

China sources most of its rapeseed imports from Canada.

 

In the January-April period, China imported 1.06 million tonnes, compared with 260,459 tonnes a year ago.