Record after record accumulated on the rapeseed market last season. The price of rapeseed is also expected to remain high this season. Is it therefore worth giving this crop a chance? To do this, we try to look ahead to what the market price will be in a year's time.
The cultivation of rapeseed has been problematic since the disappearance of the seed coating with neonicotinoids. The area of this bright yellow flowering crop fell sharply in the EU as a result of this change. In addition to damage by the rapeseed beetle, there were repeated problems with feeding on animals, drought and wet weather conditions. The EU area of 10,7 million hectares is still more than 8% below the 5-year average. Even with an estimated yield of 30,6 million tons, this year's harvest is 3,5% below the 5-year average.
Canada is suffering greatly
Canada is the largest supplier of rapeseed worldwide and also the supplier with the most problems this season. It has been extremely dry in the prairie provinces since the start of the season. Alberta and Saskatchewan together account for 80% of all canola and spring wheat in Canada. These provinces in particular have been hit hard. Only 18% of canola in Saskatchewan was in good condition. In Alberta it was 33%. The harvest is currently underway and will continue into September. According to the latest figures from Stat Canada, the canola harvest could decrease by 6 to 8 million tonnes compared to 2020, when 20,5 million tonnes were harvested.
In the Netherlands, rapeseed cultivation does not amount to much. This year the winter rapeseed area amounts to 1.165 hectares, supplemented with 337 hectares of summer rapeseed (data: Boer&Bunder.nl). You have to go back decades to find a significant area. More than 500 hectares are cultivated in Groningen. The remainder mainly in Gelderland. In years with a high market price, the area can increase to around 2.500 hectares.
Margin equal to wheat
On Monday, August 16, the European futures market quotation for rapeseed closed at €574 per tonne (delivery in November). The quotation for February is ten euros below that. However, those who want to secure their product for the 2022 harvest now can do so at considerably lower prices. These are about €90 below the current level. A price around €480 is still above the average of recent years. With a rapeseed yield of 4,5 tons per hectare, you are currently talking about €2.580 per hectare. That is slightly more or equal to the yield of wheat at 9 tons per hectare. That is the price for the seed, excluding income from straw. Rapeseed is especially a nice change for grain companies. In combination with sugar beets or other crops it is more difficult. That is why Dutch arable farmers have little appetite for it.
Rapeseed is expected to remain reasonably priced this season. Especially because Canada harvests considerably less. The market is partly dependent on the price of palm and sunflower oil. The idea is that the yield of palm oil in particular can increase worldwide in 2021-22. Sunflower prices in Ukraine, Russia and the EU are increasing less rapidly than expected due to extreme weather. Australia has also sown significantly more rapeseed to respond to the loss of Canadian supply.
Ask about vegetable oils
Global demand for vegetable oils is favorable and is expected to remain so. According to the USDA, global consumption is increasing by more than 4%. In addition, more vegetable oil is used in biodiesels. The oil market plays an indirect role in this and the continued uncertainty surrounding the corona pandemic. At the moment there are no indications that more space is being created on the oil market.
Thanks to the increased margins for rapeseed, arable farmers in the EU and Ukraine will probably sow more hectares next season than has been the case in recent years. If the market remains firmly priced – as is currently expected – Canada will follow suit next spring. The global market could then look very different. The fact remains that the demand for vegetable oils is growing and has a fixed undertone. Anyone who wants to give rapeseed a chance will probably not be disappointed, but whether records will be broken again remains to be seen.
Growing after the market is often a bad choice. However, those who made the choice last summer are now reaping the benefits. Whether this exceptional market situation will last for another season remains to be seen. Growers who have now harvested their harvest are doing well. Prices are likely to rise further, especially until the new year, because the yield figures of Canada, Ukraine and the EU will be adjusted even further downwards. If Australia comes onto the market, this will provide relief for prices. All this is less good news for livestock farmers. Turnip scrap remains at a high price with little hope of a structural decline.