China turns to rapeseed meal as Black Sea disruption threatens sunflower meal supply
Disrupted Black Sea logistics could reduce sunflower meal deliveries to China, where Ukraine is the largest supplier, and push feed mills toward rapeseed meal, UkrAgroConsult reported. The soybean meal to rapeseed meal futures spread in China reached 1,091 yuan per tonne on 15 September against a five-year average near 600 yuan per tonne. Resumed Canadian rapeseed and rapeseed meal flows are seen as the main brake on further price gains.
Disruptions to Black Sea logistics could reduce sunflower meal deliveries to China and support demand for rapeseed meal as an alternative feed component, UkrAgroConsult reported. Ukraine has in recent years become the largest supplier of sunflower meal to the Chinese market, which leaves Chinese compound feed producers directly exposed to the working order of Ukrainian export routes.
Cargoes rerouted through Danube ports
Because of the disruption to Black Sea logistics, part of the cargo volume is being redirected through Danube ports, where delays are also occurring, according to UkrAgroConsult. The rerouting keeps shipments moving but lengthens delivery times and adds handling steps for volumes that would otherwise leave from deepwater terminals. For buyers at the other end of the route, the immediate effect is uncertainty over arrival dates rather than an outright absence of product.
If transport problems persist, a smaller supply of sunflower meal would raise its price and force Chinese compound feed producers to increase the share of rapeseed meal in their formulations, UkrAgroConsult said. Feed mills build rations on relative cost and availability, so a prolonged delivery problem in one protein meal converts quickly into physical demand for another.
Spread to soybean meal widens to 1,091 yuan per tonne
Demand for rapeseed meal is additionally supported by the wide price gap with soybean meal. As of 15 September, the spread between soybean meal and rapeseed meal futures in China reached 1,091 yuan per tonne, against an average of about 600 yuan per tonne over the past five years, UkrAgroConsult reported. The gap is therefore running roughly 80 percent wider than its five-year norm.
- Soybean meal to rapeseed meal futures spread in China on 15 September: 1,091 yuan per tonne
- Five-year average spread: about 600 yuan per tonne
- Dongguan spot rapeseed meal: 2,470 yuan per tonne, up 50 yuan per tonne
A gap of that size is already changing formulation arithmetic. Mid-protein meals compete with soybean meal directly on cost per unit of protein, and at the current difference the rapeseed option wins on price in a broad range of rations.
Chinese feed mills already lifting rapeseed meal inclusion
Against that price difference, Chinese feed producers are already increasing the share of rapeseed meal, which is supporting both its consumption and its prices, UkrAgroConsult reported. The spot price of rapeseed meal in Dongguan, in southern China, has recently risen by 50 yuan per tonne to 2,470 yuan per tonne.
Canadian supply seen as the main brake
Further growth in the market may be restrained by the resumption of Canadian rapeseed and rapeseed meal supplies to China. Analysts expect higher imports and a recovery in crushing to gradually strengthen supply, UkrAgroConsult reported. That would rebuild the domestic availability on which the current price rally rests, and it would do so regardless of what happens in the Black Sea.
The key variables for the market therefore remain the situation in the Black Sea, the pace of Canadian deliveries and the direction of soybean prices in the United States. For Ukrainian exporters the risk is not limited to a disrupted shipping schedule: once a substitution is written into a Chinese feed formulation, it tends to reverse slowly.
