Australia and Canada expect increased demand for canola from the EU in the new season

Experts of Oil World (Germany) lowered the forecast of rapeseed production in the EU in 2024 to 17.6 mln tonnes (20 mln tonnes in 2023), as prolonged rains in France and Germany negatively affect the crops. And the European Commission predicts a decline in production to 18.38 million tons. Therefore, Australian analysts expect the EU to increase the demand for canola in the current season.

At the same time, Oil World warns about the possible reduction of sunflower and rapeseed oil supplies from the Black Sea region due to unfavorable weather conditions, which will be partially offset by the increase in soybean oil imports.

Demand for canola will be boosted by temporary anti-dumping duties imposed by the European Commission against Chinese biodiesel and renewable fuels, which will come into effect on August 16. The anti-dumping duty of 36.4% will be imposed on 39 Chinese biodiesel exporters, three more will receive rates ranging from 12.8-36.4%, and the duty for companies that assisted the EC investigation will be 23.7%. At the same time, Chinese environmentally friendly jet fuel will not be subject to duties.

According to the European Biodiesel Board (EBB), China supplied 1.8 million tons of biodiesel to the EU in 2023, or 10% of total consumption. Reduced supplies from China will restore European biodiesel production, increase demand and support prices for rapeseed and canola, which is good news for exporters in Australia and Canada.

The next step of the European Commission may be to impose a duty on imports of Chinese used cooking oil, which will further support demand and prices for rapeseed.

In Australia, the weather is favorable for the formation of a good canola crop, while dry weather in July in Canada led to a significant rise in canola futures last week. During July 17-23, in Alberta, the number of canola crops in good or excellent condition decreased from 71.8% to 48.6% compared to the previous week. In Saskatchewan, the topsoil moisture content was 50% due to prolonged exposure to high temperatures and lack of precipitation.

But the other day it rained in the prairies, which reduced the heat, which immediately affected the quotes. November canola futures on the Winnipeg Stock Exchange for the week fell by 10% to 610 CAD/t or 440 $/t (-6.6% for the month), which increases the pressure on quotations in Paris.

Tags: Australia, EU, prices, rapeseed, crop forecast