The French market bureau Strategie Grains expects worldwide production of wheat to increase by 3% to 762 million tons next season. The world production of maize and barley will increase by 2022% and 2023% respectively in the 1/6 season. The rapeseed market will also show a further recovery, the analysts expect.
In the European Union, the rapeseed yield next season will be around 18,2 million tons, Strategy Grains expects. This is 2 million tons more than previously forecast and 7,4% higher than this season's yield. The latter amounts to approximately 17 million tons. An increasing trend is visible, because the current rapeseed harvest is 1,8% above the level of one year ago. The increase in production is mainly due to an increased area in the main rapeseed producing countries in the European Union, such as France, Lithuania and Poland.
Ukraine, one of the largest exporters of rapeseed, also sees a plus when it comes to rapeseed. The winter rapeseed area for the 2022/2023 marketing year reaches the highest level in thirteen years at 1,41 million hectares. This is 40% more than the previous season and only 2% below the record of 1,44 million hectares from the 2009/2010 season. The high profitability this season is one of the reasons for the increased sowing. The local price for the 2022/2023 season is around $680 per tonne for shipment in July and August. That was $415 per ton two years ago, making oilseed rape one of the most profitable winter crops in Ukraine at the moment. Production costs average about $440 per tonne.
According to analysts, the combination of strong demand and tight global supply will continue next year, keeping the crop profitable. However, the increased yield expectations have somewhat tamed the listing on the Euronext. The quotation closed on Friday February 18 at €703,75 per tonne. This is slightly higher than one week earlier (€691,50 per tonne), but far below the level at the beginning of January (€828 per tonne). The quotation is now hovering around the level of early December. Although that is still far above the prices before the corona pandemic.
Competitors remain highly priced
Many analysts question whether the price drop in rapeseed can continue. Prices for soybeans and palm oil, rapeseed's main competitors, rose to record highs last week. Soybean prices on the CBoT in Chicago closed at $18 per bushel on Friday, February 16,01. A week earlier it was $15,85 per bushel. Soybean oil prices rose from $6,59 per bushel on Friday, February 11, to a record $6,70 per bushel on Friday, February 18.
Palm oil closed at 17 Malaysian ringgit per tonne on Thursday, February 5.970. Converted – at the current exchange rate – that is $14.28 per tonne or €1.257 per tonne. Earlier in the week a record was also shattered. Since these two food commodities will remain highly priced in the coming period, it is expected that there will be more demand for rapeseed as a cheaper alternative. More demand is expected to result in an increase in prices, if the age-old market principle does its work.