August 29, 2011

China faces rapeseed overload

China is facing a very serious overcapacity in its rapeseed processing sector, the China National Grain and Oils Information Center said Friday (Aug 26).

Government and private-sector officials, including state grain trader Cofco Ltd., have said that China's rapeseed industry - a key contributor to cooking oil supply - needs to be consolidated, since overcapacity creates unstable prices.

China has a rapeseed crushing capacity of 40 million tonnes per year, far exceeding this year's estimated 12.5 million-tonne output and 1.5 million tonnes of imports, the CNGOIC said in a report.

Most rapeseed crushers are concentrated in the middle to lower reaches of the Yangtze River, the centre said. Geographic concentration of an industry usually presents distribution problems.

In its latest crop forecast, the CNGOIC said China's rapeseed output is likely to reach 12.5 million tonnes this year, down 4.5% from last year. However, the National Reform and Development Commission, the country's top economic planning agency, revised the estimate slightly upward to 12.6 million tonnes Thursday.