Chinese business concerned about future of rapeseed shipments from Russia

MOSCOW. Dec 28 (Interfax) - Chinese business is concerned about the future of rapeseed supplies from Russia.

A source in the oilseed market told Interfax that this follows from a letter from the Manchurian Consortium for Import and Processing of Agricultural Products to the Siberian Grain Consortium Association.

In the letter, Chinese businessmen asked their Russian colleagues "to make every effort to preserve the possibility of <...> rapeseed exports to China via the Zabaikalsk-Manchuria international border crossing. This ought to be done "in order to preserve mutually beneficial relations between the Chinese and Russian sides and contribute to China's food security," the document reads.

As reported, there is a ban on the export of rapeseed from Russia until February 28, 2023, except for the supply of this oilseed through the Zabaikalsk border crossing.

Following the appeal from their Chinese colleagues, the Siberian Grain Consortium sent a letter to Russian Agriculture Minister Dmitry Patrushev, pointing to the fact that "information appearing regarding the possible ban on rapeseed export in 2023 prompted a negative reaction both from rapeseed exporters in Russia and importers in China" and asks that "hasty administrative steps not be taken."

The authors of the letter emphasize that it is precisely rapeseed exports that are expedient at the moment as there are prospects for growth in demand for rapeseed oil on the world market and the market is in a surplus. At the same time, given the purchasing prices of rapeseed, the profitability of its purchase by traders in China is at a level of 40-50%.

"At the same time, the Siberian Grain Consortium is not seeing purchasing activity for supplies to the domestic market. In fact, China is currently Siberia's only market for rapeseed," the source said.

It is noted in the letter that focusing on high margins, farmers in 2022 increased rapeseed cultivation areas both in the whole country and in the Siberian Federal District. As a result the harvest of rapeseed in Siberia rose 27% year-on-year.

According to Agriculture Ministry data as of December 21, 4.7 million tonnes of rapeseed have been harvested in Russia in comparison with 3 million tonnes a year ago.

The authors of the letter think that limitation of rapeseed export may lead to decrease in areas sown with rapeseed in the future and leave "chaotically built processing plants" without feedstock.

According to the source, in September-October 2022 Russia exported about 70,000 tonnes of rapeseed, with the bulk of it sent to China.

Interfax has asked the Agriculture Ministry for comment.