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.

Prospective ample supplies in 2022/23 have created price pressure since July. For most oilseeds and products there is, in our opinion, additional downward potential in prices in the months ahead. Sharply lower prices will unfold pent-up demand, boost imports and result in a rebounding of in world consumption of oils & fats in 2022/23.

Global rapeseed prices have continued to decline sizeably in September, pressured by the pronounced recovery in global supplies and weakening vegetable oil prices. Nearby prices in Europe fell below US-$ 570 in the week to Sept 22, reducing the average in the first 22 days of the month to only US-$ 594, down 8% on the month and more than 40% below the level registered in May.

Following unprecedented year-on-year increases during the 2021/22 season, European rapeseed prices declined on the year in Aug und September. However, this is only true in US dollar terms, as prices paid to the European farmer were still higher than in Sept 2021, reflecting the weakness in the euro vis–a-vis the US dollar.

But it remains to be seen whether the latest price setback was already sufficient to revive world import demand, following price-driven demand destruction in the past twelve months. China has reportedly already stepped-up purchases of Canadian canola in recent weeks and we expect total Chinese imports of rapeseed & canola to recover by at least 1.7 Mn T or more than 80% in July/June 2022/23.

A recovery in imports is also shaping up in Pakistan, the UAE and Mexico, while EU imports are seen declining further, curbed by this year’s 2.3 Mn T increase in domestic rapeseed production. However, reserved farmer selling – assuming a further setback in rapeseed prices – may raise actual EU-27 imports above our current estimate of 5.55 Mn T in July/June 2022/23 (vs. 5.8 Mn T a year earlier).

The pronounced recovery in Canadian canola production, another prospective large Australian crop and better than initially expected Ukrainian rapeseed production (with export logistics the major constraint at the moment) are likely to boost global trade in 2022/23. The bearish impact on world market prices is compounded by this year’s bumper Russian rapeseed crop, with trade flows of seed as well as of rapeseed oil and meal curtailed by current political tensions and non-tariff trade barriers.    

South American rapeseed & canola exports will also continue to rise sharply in 2022/23, after farmers more than doubled plantings of rapeseed & canola during the past three years to roughly 460 Thd ha in 2022.

World production of rapeseed & canola is now estimated to reach a new high of 74.4 Mn T in 2022/23, up 1.0 Mn T from our estimate a month ago and 7.8 Mn T above the year-ago level. This is paving the way for a recovery in world rapeseed crushings in the vicinity of 4.7 Mn T in July/June 2022/23, with biggest increases expected in Canada, the EU-27 and China.

However, the growth in rapeseed crushings will be limited by the prospective sizeable increase in world palm oil (+3.0 Mn T), soya oil (+1.5 Mn T) and sunflower oil (+0.6 Mn T) output and uncertain global vegetable oil demand (primarily in China).

The prospective sizeable increase in European production, subdued world import demand for EU rapeseed oil and weakness in global vegetable oil prices have taken their toll on EU rapeseed oil prices so far this month. Nearby prices in Rotterdam plummeted to only around US-$ 1320 in the week to Sept 22, almost $ 400 or 23% below the July average and considerably below the year-ago level. While we expect a further increase of rapeseed oil demand from EU biodiesel/HVO producers, EU rapeseed oil will also have to be competitively priced to regain market share on the world market.

26.09.2022

 

 

Prospective ample supplies in 2022/23 have created price pressure since July. For most oilseeds and products there is, in our opinion, additional downward potential in prices in the months ahead. Sharply lower prices will unfold pent-up demand, boost imports and result in a rebounding of in world consumption of oils & fats in 2022/23.

Global rapeseed prices have continued to decline sizeably in September, pressured by the pronounced recovery in global supplies and weakening vegetable oil prices. Nearby prices in Europe fell below US-$ 570 in the week to Sept 22, reducing the average in the first 22 days of the month to only US-$ 594, down 8% on the month and more than 40% below the level registered in May.

Following unprecedented year-on-year increases during the 2021/22 season, European rapeseed prices declined on the year in Aug und September. However, this is only true in US dollar terms, as prices paid to the European farmer were still higher than in Sept 2021, reflecting the weakness in the euro vis–a-vis the US dollar.

But it remains to be seen whether the latest price setback was already sufficient to revive world import demand, following price-driven demand destruction in the past twelve months. China has reportedly already stepped-up purchases of Canadian canola in recent weeks and we expect total Chinese imports of rapeseed & canola to recover by at least 1.7 Mn T or more than 80% in July/June 2022/23.

A recovery in imports is also shaping up in Pakistan, the UAE and Mexico, while EU imports are seen declining further, curbed by this year’s 2.3 Mn T increase in domestic rapeseed production. However, reserved farmer selling – assuming a further setback in rapeseed prices – may raise actual EU-27 imports above our current estimate of 5.55 Mn T in July/June 2022/23 (vs. 5.8 Mn T a year earlier).

The pronounced recovery in Canadian canola production, another prospective large Australian crop and better than initially expected Ukrainian rapeseed production (with export logistics the major constraint at the moment) are likely to boost global trade in 2022/23. The bearish impact on world market prices is compounded by this year’s bumper Russian rapeseed crop, with trade flows of seed as well as of rapeseed oil and meal curtailed by current political tensions and non-tariff trade barriers.    

South American rapeseed & canola exports will also continue to rise sharply in 2022/23, after farmers more than doubled plantings of rapeseed & canola during the past three years to roughly 460 Thd ha in 2022.

World production of rapeseed & canola is now estimated to reach a new high of 74.4 Mn T in 2022/23, up 1.0 Mn T from our estimate a month ago and 7.8 Mn T above the year-ago level. This is paving the way for a recovery in world rapeseed crushings in the vicinity of 4.7 Mn T in July/June 2022/23, with biggest increases expected in Canada, the EU-27 and China.

However, the growth in rapeseed crushings will be limited by the prospective sizeable increase in world palm oil (+3.0 Mn T), soya oil (+1.5 Mn T) and sunflower oil (+0.6 Mn T) output and uncertain global vegetable oil demand (primarily in China).

The prospective sizeable increase in European production, subdued world import demand for EU rapeseed oil and weakness in global vegetable oil prices have taken their toll on EU rapeseed oil prices so far this month. Nearby prices in Rotterdam plummeted to only around US-$ 1320 in the week to Sept 22, almost $ 400 or 23% below the July average and considerably below the year-ago level. While we expect a further increase of rapeseed oil demand from EU biodiesel/HVO producers, EU rapeseed oil will also have to be competitively priced to regain market share on the world market.

26.09.2022