Rapeseed: The great majority has already been exported
December 29, 2017 at 10:46 AM ,
Starry Night Ltd.
BULGARIA. Some local market players see the expected reduction in planted acreages for next year’s harvest as a natural response to the anticipated weakening demand for bio-diesel in the following years. However, other define such views as myopic since the country is relatively a smaller producer of rapeseed on an annual basis and increases in output of 10% yearly will neither drastically reduce its export market potential nor have drastic negative effects on prices. Indeed, local market players will only benefit from a strategic increase in planted acreages, regardless of the fact that the country competes with Romania and Ukraine, for instance, for EU markets.
Rapeseed: seeing the tree, missing the forest
Demand for locally grown rapeseed has been so strong since the beginning of the current marketing season, that by the 22nd of December 2017, the country managed to export 90.56% of its aggregate production (458,110 mt) from harvest 2017-18; which on a yearly basis lags behind that of last year by 10.04%. Such a robust export rate, on the background of a surplus supply of rapeseed within the Black sea basin during the current marketing season, is quite a reassuring confirmation that foreign demand for the crop is unquenched. Indeed, the abundant production within the region -- according to the most recent USDA reports and updates, Ukraine realized 2.1 mmt (68% higher, yearly) while Romania collected 1.95 mmt (11% higher, yearly) of rapeseed -- did not necessitate the build-up of high local reserves since the country exported the majority of its production before the end of the calendar year. Locally produced rapeseed represents an easy swallow for foreign buyers!
|
Harvest 2017-18 (01.07.2017 - 22.12.2017) units in MT |
|
|
Beginning availability |
25,000 |
|
Aggregate output |
458,110 |
|
Imports |
27,655 |
|
Domestic consumption |
40,000 |
|
oil & biodiesel production |
40,000 |
|
Exports to the world |
414,861 |
|
to EU markets |
381,365 |
|
to rest of the world |
33,496 |
Source: Bulgarian Ministry of Agriculture
Even though Bulgaria does not have either a comparative advantage nor an absolute advantage in the production of rapeseed within the Black sea region, its country’s advantage seems to strategically lie in its relatively lower production potential, which necessitates a swift export rate and almost a complete buyout. That is why, reducing planted acreages, local market players will only suffer in hitting sales targets since they absolutely cut their production target volumes, ceteris paribus. A case in point, by the 23rd of December 2016, the country exported 490,771 mmt, which is higher by 15.47% than this year’s exports.
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