Rapeseed: Will farmers benefit from forecasted clues in the EU biodiesel sector or totally miss the mark?
January 18, 2018 at 2:33 PM ,
Starry Night Ltd.
BULGARIA. During the recent harvesting season, the country recorded an aggregate output of 458,110 mt or by 10% less than the previous one. The decline is significant since farmers compete on quality and not quantity while the greater majority of rapeseed is exported. Most probably, the upcoming harvest will produce even a smaller output, ceteris paribus, since local farmers reduced planted acreages by as much as 7% on a yearly basis or to 172,659 ha, according to the Ministry of Agriculture.
Rapeseed: a short-term response to expected medium-term changes
Farmers’ decision to cut planted acreages for harvest 2018-19 seems to be based on two external factors: the strong production and export potential of regional market players, such as Ukraine, as well as, the projected demand backdrop from EU countries for rapeseed from the biodiesel sector in the EU. So, prospects on next year’s output to be higher have already been beaten down. In addition, intermediary market players should remember that before the Spring comes, the Winter has to pass, and they should not discount potential winterkill because of adverse weather conditions!
|
Harvest 2017-18 (01.07.2017 - 12.01.2018) units in MT |
|
|
Beginning availability |
25,000 |
|
Aggregate output |
458,110 |
|
Imports |
27,655 |
|
Domestic consumption |
44,000 |
|
oil & biodiesel production |
44,000 |
|
Exports to the world |
421,861 |
|
to EU markets |
388,365 |
|
to rest of the world |
33,496 |
Source: Bulgarian Ministry of Agriculture
Hopefully, the reduction of next season’s to-be-harvested land will highlight local farmers’ strategic acumen in responding to external market forces, over which they lack control, and does not lead to highlighting their myopic view of underestimating their competitive position on the international market. After all, the country is a relatively smaller regional producer of rapeseed while the greater majority of it is exported in the few months following harvest. A case in point, by the end of September 2017, close to 64% of aggregate output were already exported. Therefore, for some market players, it is yet difficult to swallow such a decision as the right one; since doing something and doing the right thing are two quite different outcomes. Yet, the dice has been already thrown while time will show, how it will land.
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