The bearish sentiment in vegetable oils pressured world market prices of rapeseed & canola in the first half of October. Nearby prices in northern Europe declined to less than EUR 420 in the week to Oct 20, 5% below the Sept average and the lowest level since early June.
The weakness in EU rapeseed prices was more pronounced than in Canadian canola in recent weeks, with the discount in nearby futures on the Matif vis-a-vis canola on the ICE in Winnipeg widening to US-$ 90 on Oct 20 (vs. $ 79 a week earlier and only $ 55 on Oct 3).
Canadian canola prices are currently still supported by this year’s production setback (down 1.2 Mn T) and large US import requirements of oils & fats, which have kept vegetable oil prices in North America above the world market in recent months. Demand-rationing is expected to occur primarily in Canadian canola exports this season, with shipments estimated to fall by 1.0 Mn T to 7.0 Mn T Aug/July 2023/24. In contrast, crushings are seen increasing by at least 0.4 Mn T to 10.35 Mn T this season.
Rapeseed crushings in the EU-27 recovered by 2.2-2.3 Mn T during the past 12 months, reflecting replenished domestic supplies and rising imports. However, even the pronounced increase in EU rapeseed crushings in recent months was insufficient to prevent further price pressure. This year’s large EU crop, Ukrainian supply pressure, considering the logistical constraints at the Black Sea ports, as well as lower than initially expected exports to non-EU countries from the Baltics and Romania have pushed EU rapeseed supplies to burdensome levels of late.
Abundant and attractively priced export supplies in Russia and Ukraine also boosted EU rapeseed meal imports to a record 190 Thd T in July/Aug 2023, more than doubling on the year. The increase in EU rapeseed meal exports was much smaller at 29% in July/Aug, turning the EU into a net importer of 73 Thd T compared to net exports in July/Aug 2022. Significantly larger EU supplies weighed on rapeseed meal prices in Northwest Europe in recent weeks. Nearby prices in Hamburg dropped to a 3-year low of US-$ 286 on average of Oct 1-20, down 14% from the average of $ 334 registered in July 2023.
However, vegetable oil prices are likely to strengthen relative to oilmeals in 2024, favouring processing of high oil-yielding oilseeds such as rapeseed. A production deficit will be developing according to latest OIL WORLD supply & demand forecasts, mainly due to a slowing-down of the production growth in palm oil, sunflower oil and rapeseed oil. Focus will be given to the rainfall in the palm oil and lauric oil producing areas of Southeast Asia.