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.
The deteriorating production outlook is likely to keep European rapeseed prices relatively well supported in the near to medium term. However, increasing volatility in the global veg. oil and oilseed markets (primarily soybeans and palm oil) may also pressure rapeseed prices at least temporarily. At the moment, new-crop prices at around EUR 450-460 are roughly EUR 50 above the latest 10-year average, creating an excellent marketing opportunity for European farmers.
EU rapeseed production is turning out lower than initially expected in 2021, following partly severe frost in France and parts of eastern Europe of late. The extent of the damage to emerging rapeseed crops is still unclear but an impact on yields in the affected areas appears inevitable.
Latest OIL WORLD estimates project a French rapeseed crop of only 3.05 Mn T this year, down 0.2 Mn T on the year and the lowest level since 2001. Reduced winter rapeseed sowings are seen as the limiting factor for this year’s crop, while yields are still expected to recover by 6-7%. In contrast, German rapeseed production prospects have improved in recent weeks. Sufficient moisture supplies in the key producing regions as well as only limited disease infestation have created partly excellent growing conditions.
Total EU-27 rapeseed production is now forecast to increase by only 0.3 Mn T to 16.4 Mn T in 2021 while we still projected an increase of 0.5 Mn T in late February.
EU rapeseed supplies are set to remain tight also in 2021/22, taking the expected further decline in carry-over stocks to or even below 0.8 Mn T into account (down 0.2 Mn T). The prospective recovery in EU production is thus likely to be insufficient to ease the current tightness, keeping import requirements high and prices supported in July/June 2021/22
Also Canadian canola supplies are likely to be curbed next season, following the record pace of disposals in Aug/March 2020/21. Even an increase in the area planted this spring will be insufficient to raise Canadian canola supplies. On top of that, dryness in parts of the Prairies may jeopardize this year’s crop. There is currently no margin for European crushers to purchase Canada canola for shipment in July/Dec 2021, shifting most of the EU import requirements to Ukraine and Australia in the first half of 2021/22.
Thus, any weather-related production losses in Australia this year would result in a rally of EU rapeseed prices. Weather forecasts and soil moisture levels are boding well for a further sizeable increase in Australian canola plantings in coming weeks, favouring a crop in the vicinity of 4.2-4.3 Mn T at the end of the year. We expect EU imports of Australian canola to increase further in July/June 2021/22.