The price of rapeseed has set records this year. A sharply reduced acreage in Europe, lower yields and a disastrously poor harvest in Canada are all ingredients that play a role. After a significant downward revaluation, the price is climbing again in early December.
The rapeseed market builds on a solid foundation provided by the vegetable oil and biodiesel market. Add to that the disappointing returns and you have a record. On November 12, the Matif contract reached a record €710,25 per tonne. Subsequently, the February contract was downgraded to €644,75 per tonne on December 1. Last week was slightly more positive with a close of €682,75.
On Monday afternoon, December 6, part of the profit must be forgiven again and the price is at a minus of €7 per tonne. What is also bothering the rapeseed market is the news about the omikron variant of the coronavirus, which dampens the mood.
More acreage
The sky-high oilseed rape price has certainly convinced arable farmers in Europe to give the crop a chance. In many places - especially in Northwestern Europe - the crop has been abandoned after the seed coating with neonicotinoids was discontinued. The result was a plummet in the area in the EU. Consulting firm Strategy Grains expects that for the 2022 harvest year the total yield will increase by 6% to 18 million tonnes in the EU 27 and the United Kingdom. This is mainly due to a larger area.
The three largest producers are France, Germany and Poland. They all foresee more rapeseed for the 2022-2023 season. Strategy Grains expects a smaller area in Central and Eastern Europe. A potentially large European rapeseed harvest could have consequences for price formation next season.
Falling prices
The current season is expected to end at a record high. However, the price will drop somewhat as the season progresses, according to the French analysts. Not only because of a new growing season, but also because the South American soybean harvest is starting and this has consequences for the price formation of vegetable oils. Canada has further adjusted its rapeseed yield downwards in a new correction round.
The rapeseed harvest is currently in full swing in Australia. The headlines mainly focused on the consequences that rainfall in the country has had on the harvest and quality of wheat, but rapeseed has also been affected. The oil percentage in particular has fallen and there is hardly any demand for B-quality. Yet the problems are not nearly as great as with wheat, partly because much of the harvest comes from the west coast while the weather problems are in the east.
Sell reluctantly
A record harvest of 5,7 million tonnes of rapeseed in Australia will not have a major impact on prices in the southern hemisphere. This is mainly due to the small Canadian harvest. The lowest in fourteen years. Australian arable farmers are reluctant to sell because they have sufficient liquidity for the short term.
There is also a link between the price of rapeseed and the chip market. Fish and chip shopowners, but also chip manufacturers, complain about it price level of rapeseed oil. That has increased by 70% this year. The oil is popular as a raw material for frying oil. 30 liters of oil is required per ton of fries in the factory, where a blend is made together with other oils. Arable farmers think very differently about price increases. They can sell their rapeseed on the physical market for 1000 Australian dollars per tonne. Converted to approximately €623 per tonne.
Not everything negative
Are the prospects for rapeseed completely negative? The facts remain unchanged for this season. The soy harvest is putting more pressure on the oil market and buyers' interest (mainly China) is shifting from rapeseed to soy. In the EU we are waiting for winter and how the crops will start next spring. Is there frost damage or can they develop well at mild temperatures? So anything can still happen.