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.

The fundamental change from severe tightness in the second half of the 2021/22 season to record world supplies of rapeseed & canola in 2022/23 caused a decline in European rapeseed and rapeseed oil prices, which accelerated in the first three weeks of December.

Nearby rapeseed oil prices in Rotterdam dropped to only US-$ 1187 on Dec 20, the lowest level since early February 2021 and down from the average of $ 1370 in Oct 2022 and $ 1743 in Dec 2021. Rapeseed oil prices in Europe were relatively weaker than those of other vegetable oils in the past six months, turning the sizeable premiums over sunflower oil and soya oil still registered in Dec 2021 into discounts. Also, the premium vis-a-vis crude palm oil in Northwest Europe diminished to only $ 180-190 of late, sharply below the average of $ 400 in Jan/Nov 2022.

However, larger domestic supplies and weakness in EU rapeseed oil prices have apparently revived import demand (primarily from Norway) in recent months. The temporary discount vis-à-vis South American soya oil reportedly also prompted export sales of European rapeseed oil to China.  

Future price prospects of rapeseed & rapeseed oil will depend on how quickly the current supply surplus in the EU will be disposed of and to what extent foreign purchases and rising exports will occur. Considering that a larger portion of Canadian canola oil export supplies may be sold to the US biofuel industry, there are improving export opportunities for European rapeseed oil on the world market. We expect a recovery in rapeseed oil prices from the current depressed level.

Changes in the biodiesel framework in various EU member states for 2023, partly including the phasing-out of palm oil as a feedstock for biodiesel, are seen raising EU demand for rapeseed oil further in coming months.

Exports of rapeseed from key supplying countries have been on a clear uptrend. They were 0.4 Mn T above a year earlier in October and are expected to rise by a combined 1.2-1.4 Mn T in Nov and Dec this year, mainly on account of Canada and Australia.

Most of the year-on-year increase in exports of rapeseed & canola was shipped to China lately. However, also European imports have exceeded initial expectations in recent weeks (primarily imported from Ukraine), exerting price pressure.

Weekly Prices of Rapeseed Oil in Europe
 Weekly Prices of Rapeseed Oil in Europe

Latest OIL WORLD estimates peg European rapeseed production at 19.5 Mn T (vs. 17.3 Mn T in 2021) and imports at 6.0 Mn T in July/June 2022/23 (up 2% on the year), paving the way for a big increase in processing.

Following the transition from tight old-crop supplies in July/Sept 2022, when processing even declined slightly by 0.1 Mn T, world crushings are now gaining momentum and are estimated to exceed the year-ago level by 1.6 Mn T in Oct/Dec.

They are expected a further increase in Jan/Mar and in Apr/June 2023, raising the total to a new high of 35.6 Mn T in the second half of the 2022/23 season (vs. 31.5 Mn T in Jan/June 2022).

The fundamental change from severe tightness in the second half of the 2021/22 season to record world supplies of rapeseed & canola in 2022/23 caused a decline in European rapeseed and rapeseed oil prices, which accelerated in the first three weeks of December.

Nearby rapeseed oil prices in Rotterdam dropped to only US-$ 1187 on Dec 20, the lowest level since early February 2021 and down from the average of $ 1370 in Oct 2022 and $ 1743 in Dec 2021. Rapeseed oil prices in Europe were relatively weaker than those of other vegetable oils in the past six months, turning the sizeable premiums over sunflower oil and soya oil still registered in Dec 2021 into discounts. Also, the premium vis-a-vis crude palm oil in Northwest Europe diminished to only $ 180-190 of late, sharply below the average of $ 400 in Jan/Nov 2022.

However, larger domestic supplies and weakness in EU rapeseed oil prices have apparently revived import demand (primarily from Norway) in recent months. The temporary discount vis-à-vis South American soya oil reportedly also prompted export sales of European rapeseed oil to China.  

Future price prospects of rapeseed & rapeseed oil will depend on how quickly the current supply surplus in the EU will be disposed of and to what extent foreign purchases and rising exports will occur. Considering that a larger portion of Canadian canola oil export supplies may be sold to the US biofuel industry, there are improving export opportunities for European rapeseed oil on the world market. We expect a recovery in rapeseed oil prices from the current depressed level.

Changes in the biodiesel framework in various EU member states for 2023, partly including the phasing-out of palm oil as a feedstock for biodiesel, are seen raising EU demand for rapeseed oil further in coming months.

Exports of rapeseed from key supplying countries have been on a clear uptrend. They were 0.4 Mn T above a year earlier in October and are expected to rise by a combined 1.2-1.4 Mn T in Nov and Dec this year, mainly on account of Canada and Australia.

Most of the year-on-year increase in exports of rapeseed & canola was shipped to China lately. However, also European imports have exceeded initial expectations in recent weeks (primarily imported from Ukraine), exerting price pressure.

Weekly Prices of Rapeseed Oil in Europe
 Weekly Prices of Rapeseed Oil in Europe

Latest OIL WORLD estimates peg European rapeseed production at 19.5 Mn T (vs. 17.3 Mn T in 2021) and imports at 6.0 Mn T in July/June 2022/23 (up 2% on the year), paving the way for a big increase in processing.

Following the transition from tight old-crop supplies in July/Sept 2022, when processing even declined slightly by 0.1 Mn T, world crushings are now gaining momentum and are estimated to exceed the year-ago level by 1.6 Mn T in Oct/Dec.

They are expected a further increase in Jan/Mar and in Apr/June 2023, raising the total to a new high of 35.6 Mn T in the second half of the 2022/23 season (vs. 31.5 Mn T in Jan/June 2022).