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 www.oilworld.de more details are provided about the company profile and the individual services.

European rapeseed prices continued to rally in the second half of December, bringing the average for the month to a a new high of 727 € in northern Europe, up 6% from the average of November and almost 80% above the year-ago level. In the first six months of the 2021/22 marketing year, prices skyrocketed by 200 € from the low of 528 € registered in August, bringing the average to record 630 € in July/Dec 2021 (vs. 394 € a year earlier).  

Heavily frontloaded disposals in the first six months of the 2021/22 season will require significant demand-rationing in Jan/June 2022, primarily in Central Europe where crushers have only limited access to imported rapeseed & canola. 

Rapeseed Price Range
 Rapeseed Price Range

Preliminary processing data for the EU-27 and the UK suggest a further year-on-year increase in rapeseed crushings by a combined 5% in November. As we pointed out in the OIL WORLD Monthly of Dec 17, EU rapeseed crushings are set to decline by approximately 0.8 Mn T in July/June 2021/22 owing to insufficient domestic production and reduced export supplies on the world market. However, processing in July/Nov exceeded the year-ago level.

Bullish fundamentals of the EU rapeseed complex are currently outweighing bearish outside factors, viz. the expected recovery of world supplies of vegetable oils, keeping prices of rapeseed and rapeseed oil well supported and at sizeable premiums over other oilseeds and vegetable oils in the near to medium term. However, it will be interesting to see how the market will manage the transition from extreme tightness in Jan/July 2022 to prospective more ample supplies in the 2022/23 season.

Comparatively high rapeseed prices and excellent returns per hectare achieved in 2021 have reportedly boosted winter rapeseed sowings in the EU-27. In our first tentative forecast we project the total area (incl. spring rapeseed) to be harvested in 2022 to increase to 5.6-5.7 Mn ha, a 4-year high and up 0.3 Mn ha or 6% on the year.

This is setting the stage for a pronounced recovery in EU-27 rapeseed production by 1.0-1.3 Mn T to an estimated 18.3-18.6 Mn T next year, a 5-year high but still trailing the 19.8 Mn T registered in 2017. Of course, weather developments, viz. potential winter killing as well as moisture supplies in spring, will be the key swing factor to watch in coming months.

But the total EU rapeseed area is still sharply below the level of 5.8-6.3 Mn ha planted in the six years to 2018. The reasons for this are manifold. Legislative changes regarding seed treatments, viz. the use of neonicotinoids, as well as limits on fertilizer application have reportedly curbed the yield potential in recent years, while creating a bureaucratic burden for farmers.