Canola prices fall on forecasts of higher Australian crop despite lower EU crop forecasts

Global canola prices have remained stable in recent weeks, but forecasts of an increased canola crop in Australia have sent quotes down.

In a new quarterly report, ABARES experts raised the forecast for the country’s canola crop in 2023/24 from 4.9 to 5.2 million tons, which will be inferior to last year’s record 7.3 million tons but will exceed the 5-year average.

On the Paris MATIF, November rapeseed futures fell 2% yesterday to €455.75/t or $489/t (-2% for the week, -4% for the month), but were supported by the forecast of a fall in the EU rape harvest by 0.4 million tons, which partially offsets the increase in production in Australia.

The Strategie Grains agency lowered the forecast for the rape crop in the EU in 2023/24 from 19.3 to 18.9 million tons, which will be 2.4% less than the 19.4 million tons of the 2022/23 season. Production will decrease the most in France, Germany and Romania.

November canola futures fell 1.8% to CAD 797.5/t or $585/t since Monday (-1.9% for the week), almost in line with last month. Canadian canola remains the most expensive, so it cannot compete with Australian or Ukrainian rapeseed on the EU market.

According to the Canadian Grain Commission, since the beginning of the season (as of August 27), Canada has tripled its exports of canola compared to the corresponding period last year to 300,000 tons, amid a decline in the Canadian dollar and dollar-equivalent prices, which has increased the competitiveness of canola.

Ukraine has already harvested 4.1 million tons of rapeseed, of which, according to forecasts, it will be able to export 4 million tons, which puts pressure on rapeseed prices in the EU.

Purchase prices for rape remain at the level of UAH 14,800-15,000/t or $365-370/t with delivery to Danube ports and €390-410/t with delivery to DAP Germany or the Baltic States.

Brent crude oil futures for the week rose by 5.9% to the highest level since November 2022 – $90/barrel against the backdrop of Saudi Arabia’s decision to extend production cuts by 1 million barrels/day until October, while the Russian Federation will cut production by 300,000 barrels/day instead of the planned 500,000 barrels/day.

Rising oil prices will support canola prices, but reduced oil imports to China and India amid deteriorating macroeconomic indicators in China will reduce oil demand. At the same time, the easing of US sanctions against Iran will increase the supply of Iranian oil to the markets, which will also limit the rise in prices.

Tags: Australia, Ukraine, EU, prices, Canada, rapeseed