European rapeseed prices are set to remain under pressure in the medium, with the bullish impact of the looming production losses in Canada in Australia offset by this year’s bumper Ukrainian rapeseed crop. Diverging global supply and demand fundamentals have significantly changed relative prices of rapeseed in recent months. The looming production shortfall in Canada as well as soaring US demand for oils & fats to reach ambitious biofuel targets – which is likely to favour domestic crushings instead of Canadian canola exports – currently contrast with further rising EU rapeseed supplies in 2023/24.
There is currently still a wide range of estimates for this year’s canola crops in Canada and Australia, with the impact of partly significant drought conditions on the average yield difficult to quantify at this stage. Latest OIL WORLD estimates peg world production of rapeseed & canola at 74.7 Mn T in 2023/24, down 3.9 Mn T from a year earlier. However, this will be more than offset by sharply higher stocks of an estimated 15.3 Mn T (up 5.3 Mn T) at the start of the season, raising world supplies of rapeseed & canola to record a 90 Mn T in 2023/24.
This year’s EU rapeseed crop is turning out smaller than initially expected at 19.6 Mn T, still exceeding the year-ago level by 0.33 Mn T. Harvesting is now nearing completion in the key producing regions. Downward revisions for France, Germany, the Baltics and Sweden were only partly offset by better higher than expected yields Romania. However, there is still a wide range of estimates both regarding the area and the average yield in Romania.
Soaring imports and smaller than initially expected EU rapeseed crushings in Jan/June 2023, curbed by the crisis in the EU biodiesel sector, resulted in sharply higher EU rapeseed stocks of an estimated 1.8 Mn T (vs. 1.0 Mn T a year earlier) at the end of the 2022/23 season. This is likely to boost domestic rapeseed supplies to a multi-year high of 21.4 Mn T at the start of 2023/24, up 1.1 Mn T on the year and more than 4.0 Mn T above July/June 2019/20.
Rapeseed exports turned out much smaller than initially expected in the first 8 weeks of the 2023/24 season. Most of the setback was registered in shipments to the UK. In contrast, EU rapeseed exports (from Romania) to Canada soared to 42 Thd T so far this season, promoted by the unusually large discount of EU rapeseed vis-a-vis Canadian canola.
Improving RME margins supported European rapeseed oil prices in the second half of August. Nearby prices in Rotterdam were quoted at US-$ 1050-1060 in the three days to Aug 28, widening the premium over sunflower oil and crude palm (both cif Rotterdam) to $ 114. This follows unusually large discounts of $ 20-50 in April and May, when the crisis in the biodiesel sector caused a temporary oversupply of rapeseed oil in Northwest Europe. Improving margins have revived European rapeseed crushings of late. Preliminary data released by FEDIOL (still incl. the UK) suggest a year-on-year increase in EU rapeseed crushings of more than 30% in July.