The European quotation for oilseed rape can't stop. 2021 was a top year for pricing. At the beginning of 2022, the futures market will shoot up like a jack-of-all-trades and the price level of €800 per ton will be broken. What is the cause of this and how much further can the price rise, or will the market get scared of heights?
At the end of December, the Matif quotation for rapeseed fell slightly to €761,50 per tonne. Still a historically high price level. It ultimately turned out to be the calm before the storm, because the race flew off the starting blocks at the beginning of 2022. On Friday, January 7, the price of the March contract closed at €828 per tonne.
Price 90% higher
During the day the price was even increased by €50 per tonne. Ultimately, the price closed €21,50 per ton higher on Friday than on Thursday, which is still a significant increase. The price is therefore almost 90% higher than a year ago.
No price ceiling
Canadian canola prices also continue to rise. On the ICE futures market, the January contract closed on Friday at $1055 per tonne (converted €737,74). The European futures market currently has the best credentials. An extremely tight rapeseed balance in the EU ensures that the price can operate without a ceiling.
Rapeseed was the worst boy in the class for years. Arable farmers in the EU were no longer happy due to a series of disappointing harvests. But there is music in the crop again. However, the provisional acreage figures do not indicate an explosion in cultivation. The European Commission takes into account 5,33 million hectares of rapeseed. Marginally more than a year earlier and still 8,5% less than the five-year average. The cultivation is too uncertain for many companies. There are almost no options for intervening with insecticides.
Based on a 'normal year' – if such a thing even exists – the harvest volume could be higher, at 17,3 million tons. Last summer, 16,7 million tons were harvested. Companies in Central and Eastern Europe prefer sunflowers to rapeseed. This crop also benefits from the positive market for vegetable oils.
Great tightness
Rapeseed consumption in the EU this season is at a very high level of more than 23 million tonnes. Even though the Union now imports almost 6 million tons of rapeseed to meet the need, the final stock is estimated at 500.000 tons. That is very tight and 1 million tons less than the previous season. By comparison, the ending stock of soybeans is more than double.
The EC also takes into account a final stock of 2021 tons for the 22-500.000 season. Consumption is estimated to drop slightly to 22,22 million tons. The EU harvest may be slightly larger, reducing the imported volume to 5,3 million tons.
Drought again in Canada
Canada is responsible for an important part of the rapeseed market. The country has harvested almost 7 million tons less this season and a number of corrections have already been made. Because it is still very dry in the country, a lower harvest is also expected this year. The question is also whether arable farmers invest money in cultivation at all when the prospects are uncertain and the start is already bad.
As mentioned, there appears to be a ceiling missing in the market. The markets for soy and palm oil, among other things, may decrease slightly in rapeseed (oil), but they will not eliminate the shortages. The coming harvest will not alleviate this shortage either. The area of summer rapeseed may increase slightly in the EU, but arable farmers generally prefer to choose other crops such as spring wheat or grain maize.
Perspective for new harvest
Prices for the new harvest are now being offered on the futures market of almost €600 per tonne for August delivery and €580 for November delivery. That offers perspective. Especially when you consider that the five-year average price level is €416.