China 2021/22 rapeseed output lower than expected: CNGOIC
Rapeseed production in China during 2021/22 marketing year is estimated to total 14.3 million tons, lower than previous expectations, according to the National Grains and Oils Information Center (CNGOIC).
The current estimate is down 150,000 tons from the figure made one month ago, but it is still higher than 14.05 million tons produced in 2020/21 marketing year.
Rapeseed planting in China were delayed in the second half of 2021 due to unfavorable weather condition including severe rainfalls in northern China that led to the massive flood in Zhengzhou, the capital city of Henan province.
Plantings of rapeseed and wheat were delayed because of the poor weather condition.
The majority of rapeseed crops in central and eastern China are still in the phase of budding and bolting (in yellow and orange) as of last week, while most crops in southwestern part of the country are blooming (in pink and purple), based on data from China Meteorological Administration.
Other than rapeseed, estimates for other crop output in this marketing year are unchanged with corn at 272.55 million tons, followed by wheat (136.95 million tons), rice (212.84 million tons) and soybean (16.4 million tons).
Flour and noodle maker continues to get squeezed by rising wheat prices
As wheat prices in China continue to rise, margins for flour and noodle producing companies are being further squeezed.
Keming Food, a publicly traded company making noodles, instant noodles, and flour, recently said raw materials accounted for more than 80% of their business costs, and rising wheat prices were the main pressure on their business.
This came after the company had hiked their prices back in November last year, and it was also in trouble with regulators in January this year due to several batches of flour of which vomitoxin levels exceeded national food safety standards.
Keming Food’s annual production capacity exceeds 900,000 tons, and their raw materials are nearly all supplied by the domestic market.
Interestingly, the company said it does not hedge their input price using futures contract.
Instead, the strategy is to buy extra when prices are low, and then use excess stocks when prices are high.
However, this strategy has likely faced some challenges as cash prices in China have been rising steadily for the past two years and prices barely declined even at the peak of last year’s harvest.
Corn, soybean meal, and soybean oil futures are very widely used for hedging in the domestic industry.
Despite that China has wheat futures listed on the Zhengzhou Commodity Exchange, the contracts are perceived as a speculative instrument and are not suitable for hedging.
The company’s stock price has plunged 31% over the past year to 11.18 yuan/share since it last hit a record high of 25.62 yuan/share in August 2020.
China Jan-Feb 2022 soybean imports rise on year: customs
Soybean imports into China in the first two months of 2022 totalled 13.94 million tons, up 4% compared with the same period last year, according to data published by China’s General Administration of Customs on Monday.
On a monthly basis, Chinese soybean imports in January and February 2021 reached 7.85 million tons and 5.55 million tons, respectively.
Soybean vessel arrivals in January each year have been historically larger than those in February as Chinese crushers typically ramp up cargo purchases 2-3 months ahead of the Lunar New Year holiday.
Since 2018, China’s soybean imports in the month of January have been 2 million tons more than the volume in February every year, according to customs data.