The price level of rapeseed is currently at the highest level in more than 2,5 years. The price of soy is also rising. This is partly due to concerns about the harvest in South America. Could the oilseed market end the year with further gains?
The February contract for rapeseed reached a closing price of €13 per tonne on the Matif on Friday, December 400. That level has not been reached since mid-May 2017. On Monday afternoon, December 16, this contract will write green numbers again, and a price of €403,25 per tonne will be quoted.
Declining rapeseed production
Europe's rapeseed market is concerned about the availability of the product. The persistently poor harvests and declining acreage in the European Union are to blame for this. What gave the price a boost at the end of last week were new figures from France. Analyst firm Stratégie Grains estimates the European rapeseed harvest for 2020 at 18,46 million tons. Earlier on that was still 19,3 million tons. It is only 1,61 million tons more than in 2019.
This year it recorded the smallest harvest in 13 years. The reason for this negativism is the declining acreage and the poor start to the season. The driest one caused problems first, followed by excessive precipitation. This also applies to the United Kingdom. In Germany and Poland, drought mainly plays a role, causing much rapeseed to fail early in the season.
Scrap prices
In the months of October and November, the price of rapeseed meal also increased: from €193 per tonne to more than €200 per tonne. The prices of soybean meal have risen or fallen slightly. Depending on the origin, the price level fluctuates between €293,25 and €320 per tonne in November.
After a weaker start to the week, the futures market quotation (United States) for soybeans also rose. On the CBoT in Chicago, the soybean contract closed at $333,45 per tonne, the highest level in about 3 weeks.
Drought in South America
A lack of rain in Argentina is one of the drivers that is causing the soy market to be surprised. The sowing season for soya and maize is now underway there, but due to drought some areas cannot be sown. This affects 1% of the planned area. According to 'Buenos Aires Grain Exchange', about 25% has been sown; that translates to 60 million hectares, compared to a planned area of 10,8 million hectares. 17,7% of the grain maize is now in the ground.
If the drought continues, this will have major consequences for the crop harvest. The estimate currently stands at 10 million tons less corn and soy compared to last season. If it remains dry, new reductions may be necessary.
Trade agreement
The global soy market is held in its grip by the Anglo-Chinese trade war. A provisional trade agreement will help the stock to post green figures. It trade agreement on the table shows a doubling of US exports to the country over a 2-year period. The deal is the result of 2,5 years of negotiations between the countries.
China will increase its agricultural purchases by $2 billion to $40 billion over the next two years, according to trade representative Robert Lighthizer. The Chinese spokespersons are a lot more careful with the statements and first await the full translation and associated details.