Market Update for Rapeseed & Canola

Update prepared by ISTA Mielke GmbH – Global Oil World analyses and forecasts for oilseeds, oils & fats and oilmeals in Hamburg, Germany. On more details are provided about the company profile and the individual services.

Uncertain rapeseed oil demand from EU biodiesel producers in Oct/Dec 2020 and in Jan/Mar 2021 limited increases in EU rapeseed prices in the four weeks to Oct 8, following the rally in the sunflowerseed complex and in soybeans only at a distance.  

In recent years approximately 5.6-5.9 Mn T of rapeseed oil was used as a feedstock for biodiesel production, equivalent to 57-59% of total European rapeseed oil usage. Especially during the winter months, a high share of RME is required to meet quality parameters in low temperatures. But the seasonal increase in rapeseed oil demand is currently at stake, following rising daily COVID-19 infection rates across Europe, which, if not contained soon, may force at least partial shutdowns in various countries in coming weeks.  

In contrast, prices of sunflowerseeds and products rallied in recent weeks, fuelled by lower than initially expected production in the Black Sea region.

Weekly Prices of Sun, Rapeseed & Palm Oil in Europe (US-$/T)
 Weekly Prices of Sun, Rapeseed & Palm Oil in Europe (US-$/T)
This is likely to promote canola processing in several key importing countries in coming months. In the week to Oct 8, the discount of rapeseed oil vis-à-vis sunflower oil widened to US-$ 90 compared to a premium of US-$ 140-150 in October 2019, reflecting the diverging market fundamentals.

But given this year’s insufficient domestic rapeseed production and the need for record EU rapeseed & canola imports of at least 6.2 Mn T in July/June 2020/21, growing world demand is seen supporting EU rapeseed prices in order to keep the import margin attractive in coming months.

Outlook 2021: Winter rapeseed sowings fell short of expectations in various EU countries this year, at least partly offsetting the further recovery indicated for Germany and the Baltics. Preliminary data for France point to a further decline in rapeseed cultivation, with various market participants suggesting an area of less than 1.0 Mn ha compared to 1.1 Mn harvested this year and the recent high of 1.62 Mn ha in 2018. In Bulgaria, winter rapeseed sowings trailed the year-ago level by 38% in early October. 

In Ukraine rapeseed production is set to decline further in 2021. Lack of soil moisture significantly delayed sowings of winter grains and rapeseed in September and early October. It is unlikely that the Agricultural Ministry's plan to devote 1.0 Mn ha to winter rapeseed in 2020 will materialize. However, strong import demand from the EU is supporting prices and has stimulated farmers to plant rapeseed beyond the recommended date.