Market Update for Rapeseed & Canola (4th of October 2021)

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 appreciate in the last week of September, reaching a new high of 656 € in northern Europe on Sept 30, up 4.5% on the week and sharply above the level of around 380-390 € a year earlier.

Average prices in September increased by 8% from the previous month to a record 602 €, marginally exceeding the level registered in May when unusually tight old-crop supplies in the EU had coincided with reduced arrivals of Canadian canola.

Weekly Prices of 2 Oilseeds (US-$/T)
 Weekly Prices of 2 Oilseeds (US-$/T)
Bullish fundamentals of the EU rapeseed complex are currently outweighing bearish outside factors, viz. the expected recovery of world supplies of vegetable oils (primarily palm and sunflower 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.

The independent strength of EU rapeseed prices is also reflected in the widening premium vis-a-vis US soybeans in Rotterdam to US-$ 153 in September, the highest level in more than 10 years. This compares to discounts of US-$ 10-45 registered in Nov/Feb 2020/21. 

Despite somewhat larger than initially expected domestic production, European crushers will still need to buy at least 5.0-5.5 Mn T of rapeseed & canola on the world market this season, requiring sizeable price premiums in the near to medium term. It is interesting to note that also countries like Pakistan, Japan and the UAE continued to import relatively large volumes of rapeseed & canola in recent months despite the significant increase in prices.

Rapeseed prices are currently also supported by rallying rapeseed oil values. The tightness in rapeseed oil will be compounded by unusually low Canadian canola oil yields in 2021/22. Market participants will closely monitor the official crush statistics for Sept and Oct for clues on the impact of this year’s severe heat and dryness on the average oil yield of the 2021 canola crop. 

Preliminary data released by the Canadian Grain Commission indicate a decline in the average oil content of this year’s canola crop by 2.7 points to an estimated 41.4% only. Taking our current Canadian canola crush estimate of around 8.6 Mn T in Aug/July 2021/22 (down 1.8 Mn T on the year) into account, a decline of this magnitude would additionally reduce Canadian canola oil output by 220-240 Thd T.