The cultivation of rapeseed in Europe is yielding excellent balances for growers this year. After years of contraction, arable farmers are therefore happy to sow more this summer. In the current circumstances, it is very doubtful whether this will work. Sowing conditions are far from ideal. There is also much to report about the market prospects. They look different from the past 1,5 years.
The story of rapeseed in the EU is well known. After the abolition of the authorization for coated seed with neonicotinoids (in 2015), cultivation took a major turn. Many crops 'crashed' shortly after sowing, because a lot of damage was caused by the rapeseed beetle. The problems are still serious in the United Kingdom, but arable farmers in Germany and France are also no longer happy. Dry summers have also not helped the cultivation.
Area and yield are increasing
A lot of tuition fees have now been paid. The area increased in the past growing season for the first time in years in the EU. The European Commission calculates 5,74 million hectares, which is an increase of almost 8%. This brings the area slightly above the five-year average. The estimated yield is almost 18 million tons. That is 4,3% above average. Poland, France and Germany are the major growing countries. There, cultivation grew again above 1 million hectares.
Few crops have had such a rollercoaster ride as rapeseed. At the end of April, the futures market in Paris reached a record high of €1.081,25 per ton for the 2021 harvest. It then fell sharply. After a rebound at the end of July - with a temporary top of €663,75 per tonne - the price has fallen again. Following the expiration of the July contract, the price level on the futures market is now stabilizing between €650 and €660 per tonne for November delivery.
Price of new harvest above average
On Monday the price closed considerably lower at €632,25. At €624 per tonne, the price for the 2023 harvest (closing price on Monday, August 15 of the August 2023 contract) is still promising. A significantly larger soy harvest in the United States will turn the market for vegetable oils red on Monday. The price level of palm oil has also fallen significantly, which also has an impact on rapeseed. With a five-year average of €415 per tonne, the long-term expectation for rapeseed remains above average.
The German UFOP (Union zur Förderung von Öl- und Proteinpflanzen) reported on Monday that the acreage in Germany is likely to increase for the 2023 harvest year. The current drought means that sowing rapeseed is a gamble for many arable farmers. Rapeseed can be sown without any problems until September 12, UFOP writes. Then it's too late. This involves progressive insight. In 2018, many farmers sowed early, hoping for rain. That did not happen, after which many crops did not develop vision properly. Sowing later with rain on hand is seen as a better alternative.
Waiting for rain
All European countries face this challenge. It may be a little less important in Poland, because there have been heavy rain showers locally. Yet it is also mainly dry there. British farmers are also betting more on rapeseed, as happened last season. Government agency AHDB believes that there are major differences per region. Areas where rainfall has fallen offer prospects for rapeseed, but in the very dry East of England the chances are small that a crop can still be sown here. It is also advised to wait until September.
In the Netherlands, cultivation is very modest and concentrated in the northeast of Groningen. Rapeseed growers who Boerenbusiness indicated that experienced growers sow slightly more, if that fits in with the cultivation plan, but that there are hardly any new entrants. Expectations for wheat are also good and this crop is seen as less risky. An advantage is that wheat generally yields more after rapeseed. The lower expectations for sugar beets could also lead to an expansion in grain and rapeseed. Traditionally, a crop plan with intensive beet and rapeseed is avoided.
International competition
Despite a smaller acreage (5% less), the Canadian government expects that 18,4 million tons of rapeseed will be harvested this year. That is no less than 32% more than in 2021/22, when the harvest was disastrously bad due to drought. The Wasde report says exports are likely to increase by more than three-quarters, to 8,8 million tonnes. The US Department of Agriculture is also sharply tightening the figures for the Australian rapeseed harvest: 6,1 million tons, which means an increase of 700.000 tons compared to last month. Rapeseed production in Russia is also described as record high at 3,9 million tons (+1,1 million tons). Last autumn, Ukrainian farmers sowed a larger area of rapeseed. The yield is good, but export is a problem. The volume of agricultural products exported is 46% lower than last year.
It is difficult to predict what the 2022/23 season will bring for rapeseed. The start in Europe is far from ideal and the chance that this will change is decreasing noticeably. With good harvest expectations in Canada, Australia and Russia, among others, the rapeseed market has few reasons to believe in a sudden revival. The alternative vegetable oil markets also play an important role. The dire Ukrainian situation thus fades somewhat into the background and plays at least a secondary role. This allows the market to return to 'normal' with price levels around €400 per tonne. The current forward rate above €600 is therefore not so bad for arable farmers who want to hedge.