Prices for rapeseed and canola declined after updating multi-month highs

Rapeseed prices on the Paris stock exchange on Monday reached the highest level since July 2023 on news of frost damage to crops in northern Europe. Following them actively grew quotes for canola, but they were cooled by the decision of the Presidential Administration not to impose duties on imports of used vegetable oil from China for the production of biodiesel, which also reduced the price of soybean oil. In addition to soybean oil, rapeseed oil from Canada is used in the production of biodiesel in the United States, so duties on Chinese oil could support prices.

the August futures for rapeseed on the MATIF exchange in Paris on Monday rose to 484,75 €/t (the highest since 24.07.2023 level), but then fell 2% to 475 €/t or 517 $/t, as traders began to take profits amid rising prices in may by 5.7% and the appreciation of the Euro against the dollar.

In the EU, the growth of prices for vegetable oils stopped, and the increase in supply of soybean oil increases pressure on prices.

According to the USDA forecast, in 2024/25 MY the global rapeseed production will decrease from 88.39 to 88.34 mln tonnes compared to the previous season, as the EU harvest will be reduced to 19 (20) mln tonnes, Ukraine – to 3.7 (4.4) mln tonnes, and India – to 15.1 (15.5) mln tonnes will be partially offset by the increase in Canada – to 19.6 (18.8) mln tonnes, China – to 15.6 (15.4) mln tonnes, and Australia – to 6.5 (5.7) mln tonnes.

At the same time, USDA experts raised the forecast of global rapeseed exports in 2024/25 MY from 16.7 to 17.6 mln tonnes, in particular, for Australia by 0.8 to 5.4 mln tonnes and Canada by 0.3 to 6.9 mln tonnes, while for Ukraine the estimate was reduced by 0.1 to 3.3 mln tonnes.

The forecast of rapeseed imports to the EU was increased to 6.6 mln tonnes (5.5 mln tonnes in 2023/24 MY and 6.84 mln tonnes in 2022/23 MY) due to active supplies from Canada and Australia. At the same time, the export forecast for Canada for 2023/24 MY was lowered from 7.25 to 6.55 million tons amid slow exports. In order to boost the supplies from Canada to the EU, the prices for canola should decrease by another 20-30 USD/t.

Following the prices of rapeseed in the EU, the July canola futures on the Winnipeg stock exchange on Monday rose to the highest level since December 2023 – 668 CAD/t, but since Tuesday decreased by 2.8% to 649 CAD/t or 476,8 $/t, and November – from 687 to 669 CAD/t or 491,5 $/t (+4.5% during may).

In the EU, spot prices for old-crop rapeseed in May-June remain at 430-450 €/t. Farmers still have large stocks of rapeseed, so processors are not raising prices yet.

In Ukraine, farmers have sold old crop rapeseed, but are in no hurry to contract the new crop, although prices reach 420-430 USD/t with delivery to ports, as a possible decrease in the harvest will lead to higher prices, including for soybeans and sunflower. But amid a sharp increase in soybean and sunflower planting areas in Ukraine and Russia, as well as global soybean production, we can expect lower prices for soybeans and oil.

Traders are closely watching the prospects of the rapeseed harvest in Brazil, where Bunge and UPL have opened a joint venture, Orígeo, to work on the RedeCanola project, which will stimulate rapeseed production in the country. According to Conab, 92 thou hectares were planted with rapeseed in the country, but the harvest does not exceed 135 thou tons. The planting area may increase in case of high yield potential, which will compete with soybeans. The decline in soybean prices in the country to 400-450 USD/t due to overproduction in the last two seasons makes farmers look for more profitable crops.

Tags: prices, Canada, rapeseed, Ukraine, EU