With a market price above €600 per tonne, we can rightly call rapeseed the new black gold. Now that it becomes clear how disastrously bad the Canadian oil seed harvest is, the market is strengthening. That clearly has consequences for next season.
A month ago we wrote an analysis about the rapeseed market and potential for next season's crop. The market price then stood at €574 per tonne for the November contract. This price level has now risen by 4,5% to €600 per tonne. We can say it is a historic level, which has not occurred in the last 20 years. The Matif opened lower again on Monday morning, September 20; at €596,75 per tonne.
Price new harvest
Expectations for the vegetable oils market are good. Especially in the short term, due to the global shortage. Reason for European arable farmers to invest heavily in rapeseed in the hope that prices will continue. The price difference with the new harvest (August 2022) is relatively large: €107/ton. However, a market price above €490 is still fine when we look at the historical development.
The area in France will increase by 15% to 20% next season writes Reuters news agency based on grower information. This season the area amounted to 977.000 hectares. That could grow to 1,12 to 1,17 million hectares next year. That is still below the multi-year average. The difficult growing conditions for oilseed rape continue to affect the crop. The risk is simply (too) great and arable farmers have alternatives.
Ideal starting point
Rainfall in August – which was so bad for the grain harvest – turned out to be an ideal starting point for rapeseed. For the first time in 4 years there is sufficient soil moisture and sowing was done under good conditions. Last autumn the crops still developed poorly. Ultimately, the French rapeseed harvest turned out better than expected. Growers' organization FOP calculates a volume of 3,35 million tons. That is 2% more than last year.
No figures have yet been published in Germany about the area for 2022. This year the harvest volume has hardly changed compared to 2020 at 3,52 million tons, despite a 4% increase in the area. The cold weather in April and the wet summer in particular did not do the crop any good. During sowing in early September it was too wet in some places in Germany, which meant that sowing was done later than desired. In extreme cases, no sowing could take place at all. Nevertheless, a further expansion of the area is plausible.
Low oil content
The other major producer in the EU, Poland, has harvested an estimated 3,2 million tonnes this season. What is particularly striking is the low oil content, below 40%. Here too, the area has increased in 2021, to 1 million hectares. Sowing took place in Poland this summer under varying conditions. Too dry but above all too wet. Good initial development is required. If a harsh winter comes, the crops may freeze to pieces if they are not sufficiently developed.
The USDA reported in its latest Wasde report that the stock-to-use ratio is only 5,2% for canola. This supports the market for the medium term. A (significantly) larger area can have a downward effect on the price. In addition to the EU, Ukraine plays an important role here and for next season Canada. Thanks to the relatively high prices for other vegetable oils (soybean oil and sunflower oil), rapeseed remains supported for now.
Consequences for by-products
For the Netherlands, scrap, the by-product that remains after pressing the seeds, is an important feed component. The LEI monthly prices (published with a 3-month delay) have so far shown a decline. The price is expected to rise in the coming quotations. The demand for protein products by livestock farmers is high across the board. There is therefore no question of a falling scrap price.