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Commodities

Japan rapeseed meal prices swayed by Chinese policy

TOKYO -- Sharp declines in Japanese rapeseed meal prices have been pinned on supply trends in North America and fluctuations in the value of soybean meal. Another factor has come to the fore: a Chinese clampdown on U.S. corn, which has shaken up the global feed business.   

     Rapeseed is processed for oil, with meal emerging as a byproduct. In late September, Japan's rapeseed meal price for the October-December quarter was fixed at 41,300 yen ($379) per ton, down 9,000 yen, or 18%, on the quarter. 

     The price is determined in part by the cost of soybean meal, since both are used as livestock feed. At the end of September, the going rate for soybean meal on the Chicago Mercantile Exchange was down more than 30% from the end of June.

     Yet industry insiders see another product swaying Japan's rapeseed meal market. A representative of Nisshin Oillio Group, the nation's leading manufacturer of edible oils and a seller of rapeseed meal, pointed to distiller's dried grains with solubles, or DDGS, a byproduct of ethanol production from corn. This is where China comes in.

     In July, it came to light that, since last October, Beijing had partially suspended imports of American corn. Chinese authorities had apparently detected genetically modified corn that is unauthorized in the country. China banned imports of DDGS from the U.S. as well. The byproduct has flowed into Japan instead, providing an alternative to rapeseed meal.

     According to CHS -- a company owned by farmers, ranchers and cooperatives across the U.S. -- China imported 34% of the DDGS exported from the U.S. in the crop year that began in September 2012 and ended in August 2013. That made China the world's biggest importer of the stuff. The ban has thrown off the supply-demand balance, pushing down DDGS prices worldwide.

     When rapeseed is processed, 30% of the output is oil; the rest is meal. Declines in rapeseed meal prices weigh on oil refiners, though some are taking steps to mitigate the impact.

     J-Oil Mills, a major Japanese cooking oil producer, said Oct. 3 that it will build a new plant in Kurashiki, Okayama Prefecture. The facility will be adjacent to a feed mill operated under the National Federation of Agricultural Cooperative Associations, known as Zen-Noh. J-Oil Mills intends to work with the feed manufacturer to sell its meal byproduct more efficiently.

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