Canola prices fell by 4% amid accelerated planting in Canada and a 3.4% decline in oil prices

The decline in oil prices by 3.4% to a 3-month low led to a sharp collapse in world prices for vegetable oils and rapeseed.

August futures for Brent crude oil on the London ICE Futures exchange yesterday fell by 3.4% to $78.4 per barrel (-7.1% over 4 sessions). The fall in prices was exacerbated by the unexpected decision of OPEC+ to resume oil production in the 4th quarter, as well as negative data on the US economy. The May ISM manufacturing index unexpectedly fell by 0.5 to 48.7, although experts had expected it to rise to 49.5. In addition, construction spending in April fell by 0.1%, while expectations were for a 0.2% increase.

On the Winnipeg stock exchange, July canola futures yesterday fell 4% to 635 CAD/t or $465/t (-4% for the month), and November – by 3.9% to 657 CAD/t or $482/t (-2.7% for the month) amid falling oil prices and forecasts of dry weather in the prairies, which will allow to complete the sowing of canola.

As of May 27, 71% of the planned area was planted with canola in Saskatchewan, 67% in Alberta, and 20% in Manitoba (as of May 20), which is slightly below the 5-year average.

the August futures for rapeseed on the Paris MATIF yesterday fell by 1.7% to 479,25 €/t or 523 $/t (-2% for the week, +4.6% for the month).

the price of European rapeseed supports the European Commission’s reduction of the forecast of rapeseed production in the EU in 2024/25 MY by 0.3 million tons to 19.1 million tons (19.7 million tons in 2023/24 MY).

In addition, the Australian bureau ABARES lowered the forecast of canola harvest in the country in 2024/25 MY from 6.1 to 5.4 mln tonnes, which is 5% lower than last year, but 21% higher than the 10-year average.

In Ukraine, prices for new crop rapeseed remain at 420-450 USD/t for delivery to the Black Sea ports and 400-405 €/t for DAP border, but demand prices for delivery to the EU increased to 440-460 €/t.

Further reduction in demand for biodiesel may adversely affect the price of rapeseed in the EU, especially given the possible intensification of supply of cheap canola from Canada.

Tags: Canada, rapeseed, prices