Update prepared by ISTA Mielke GmbH – Global Oil World analyses and forecasts for oilseeds, oils & fats and oilmeals in Hamburg, Germany. On www.oilworld.de more details are provided about the company profile and the individual services.
Tight domestic supplies and the need for record rapeseed & canola imports will require ongoing large premiums of EU rapeseed prices in 2020/21. However, the extent of the further price increase will be determined by EU rapeseed oil demand in the near to medium term. Lower Ukrainian production and virtually depleted Australian old-crop stocks are likely to raise global dependence on Canadian canola at least until Dec 2020. However, non-tariff trade barriers, viz. the still unresolved Canada/China trade conflict as well as EU sustainable criteria and non-GM requirements, are expected to limit the prospective reallocation of rapeseed & canola trade flows.
Canadian crop conditions are currently favourable, boding well for an increase in canola production to an estimated 19.7 Mn T this year (up 0.8 Mn T). But sharply lower old-crop stocks currently expected at the end of July will keep Canadian canola supplies virtually unchanged in 2020/21. Early indications point to a significant recovery in Australian canola production to or even above 3.2 Mn T in late 2020 (vs. 2.46 Mn T), paving the way for higher exports in Jan/June 2021. Of course, weather conditions in coming months will have to be monitored closely.
In the EU, early harvest results indicate lower than previously expected rapeseed yields in key producing countries this year. In France, the average rapeseed yield is currently estimated by Agreste at only 3.03 T/ha, down 4% from last year’s already reduced level and the lowest in more than 10 years. This is seen limiting French rapeseed production to 3.37 Mn T in 2020 compared to 3.5 Mn T last year and the recent high of 5.5 Mn T harvested in 2014.
A further downtrend in yields is also shaping up in the UK, Romania, Bulgaria and Austria. But German rapeseed yields are seen increasing by as much 5% to 3.5 T/ha this year, owing to better moisture supplies. EU average yields are expected to only stagnate at 3.08 T/ha this year, limiting production to 16.5 Mn T (down 0.5-0.6 Mn T on the year) considering the further decline in winter rapeseed sowings.
Tight EU rapeseed supplies will be compounded by the prospective drop in Ukrainian production. In July and August arrivals of Ukrainian rapeseed in Germany and other EU states will be unusually small.
We forecast EU imports of Australian canola to reach a three-year high of 1.7 Mn T in July/June 2020/21, virtually all of it landed in the second half of the season. This contrast with the expected 0.4-0.5 Mn T drop in arrivals from Ukraine, requiring record volumes of Canadian canola of 1.8-1.9 Mn T in the next 12 months. However, there are various factors that may curb EU imports from Canada below our current estimates, among which a Canada/China trade agreement and legislative changes in France.