The rapeseed price on the Matif fell sharply this week and is below € 700 per tonne, the lowest price level in more than 4 months. It certainly doesn't seem to have hit the bottom yet. What's going on in the vegetable oil market?
The price of rapeseed has been steadily falling for some time since the record at the end of April, when the price was well above €1.000. Things started going fast from last Monday and the rapeseed price recorded heavy losses. The price dropped from €766 to €739 on Monday (June 20) and today (June 22) the price level is €698. That is a decrease of 8,9% compared to last Monday, June 20. Compared to yesterday, June 21, the price has already dropped more than 3%.
Palm oil drives down prices
The main reason why the price of rapeseed is falling so quickly has to do with the price of palm oil. The vegetable oils have a strong correlation with each other. Last Monday, the price of palm oil fell to the lowest level since the beginning of this year and rapeseed is following this trend closely. The main reason that the palm oil market is slumping is that Indonesia wants to get rid of their large stocks quickly. The downward pressure is further reinforced by slightly falling oil prices, as palm oil sometimes serves as an alternative to fuel.
Good harvest forecast for oilseed rape
The approaching harvest in Europe, which should yield a record yield through area expansion with a relatively good yield, is also putting pressure on prices. The same applies to the yield in Canada and Australia. The latter country has a very large share in the total import of rapeseed in Europe. The Australian Agricultural Research Agency (ABARES) expects a peak yield of 5,6 million tonnes of rapeseed, the second highest yield after 2021. So far, the share of Australian rapeseed amounts to 50% of the total imports to Europe.
Rapeseed is also doing well in the Netherlands, according to insiders. In terms of area, not much more has been sown this year, because prices only increased further after sowing in August. There is clearly more interest for next season, according to Jos Groot Koerkamp, sales manager at Limagrain. "There is certainly interest. The higher price shows that the cultivation has become more interesting. Normally the crop is mainly grown in the north of the Netherlands, but we are now also seeing more demand from other areas. Whether the cultivation in area can actually expand is another matter. But the interest is there." Even though the price is now falling, the price level of €700 is still €200 higher than in June 2021.