The price of rapeseed on the Matif in Paris ended last week for the first time in almost a year below the level of €600 per tonne. Rapeseed has had quite a rollercoaster ride. In the Wasde report, a significantly larger harvest of oilseeds is expected. That forecast may further depress the market price.
The October contract on the Matif closed on Friday September 9 at a price of €597,75 per tonne. On Monday, September 12, some recovery was visible in the run-up to the Wasde report to be published by the American Ministry of Agriculture, USDA. The price moved around €600 and eventually closed at €604,75. That's a plus of €7 compared to Friday.
There are several reasons why the European price of rapeseed, which has been gradually falling since the end of April, has fallen below €600. To begin with, prices in the oil market are falling. This applies to both petroleum and other vegetable oils. On the other hand, the United States Department of Agriculture (USDA) expects a record harvest in the world. While an extremely small harvest in Canada last year fueled the global market, this year is different. In the September edition of the Wasde report, the US Department of Agriculture puts the 2022-23 oilseed harvest at 516,3 million tonnes. An increase of 2,8 million tons. More rapeseed is expected in Ukraine and Australia. This also increases the expected final stock by 10,5 million tons compared to last season.
Significantly larger harvest in Canada
Canada started the harvest season with the smallest canola stock since Statistics Canada started reporting it in 1980. Total grain stocks (excluding corn and soy) amounted to 1 million tons on August 6,31. That is almost 50% less than the five-year average. Of this amount, 14% was rapeseed. The statistics office expects rapeseed production to increase by 42% to 19,5 million tons this year. Thanks to more favorable growing conditions, the hectare yield is no less than 50% higher. Some analysts think these figures are still fairly conservative. They are still just below the five-year average.
The rapeseed harvest in Canada is having difficulty getting started due to late sowing and rain during threshing. In Manitoba, for example, almost all winter wheat has already been harvested, as have a third of spring wheat and a quarter of spring barley. However, rapeseed is at 1%, compared to 32% a year ago. Because stable late summer weather is expected, analysts believe that the rapeseed harvest will not be significantly affected by the later harvest time.
250.000 tons more imports
In the EU, 18,83 million tons of rapeseed have been harvested, according to the latest Mars report. That is slightly more than previously thought. In addition, the Union imports considerably more product. This export season (since July 1) 973.000 tons have already been imported. That is 250.000 tons more than a year ago. This has everything to do with a smaller availability of rapeseed from Ukraine. Due to good expected production in Canada and Australia, the greater import requirement is not a problem for the world market.
European arable farmers had more plans to sow rapeseed this summer due to the high price level last season. Extreme drought and a cooling market have changed that mood somewhat. The rain that fell in many places at the beginning of September helps the rapeseed germinate. Although probably not everyone has taken the chance to sow. Given the changeable and warm weather, rapeseed can develop well this autumn before entering winter.
Australia benefits from rain
Rain also falls in time in Australia for crops to benefit. The country is experiencing the La Niña weather effect for the third season in a row, which is very exceptional. It ensures that the east of the country receives plenty of precipitation. It's working out well at the moment. Statistics agency Abares expects that 55 million tons of grain and rapeseed will be harvested, which is the fifth largest harvest ever. But as last season showed, extremely heavy rain can also fall during the grain harvest. This can damage quality and hinder harvesting operations. The International Grains Council expects 5,6 million tons to be harvested in the 2022/2023 season. That is half a million tons more than previously thought, but considerably less than the 6,5 million tons in 2021/2022. That is a decrease of 14%. The area has actually increased by 12% to a record of 3,4 million hectares. Arable farmers have fertilized less because of the high fertilizer costs.
Despite the war, Ukrainian arable farmers also rely on the yellow plant. According to government figures, the area could reach around 1 million hectares for the coming season. 70% of this consists of winter rapeseed that is now in the ground. Because the price of grain in Ukraine is under heavy pressure, companies are increasingly opting for rapeseed. Problems in export logistics affect the grain market and put pressure on prices. Oilseeds such as rapeseed and sunflower seed are mainly processed domestically. The oil is easier to export than grain. That is why the rapeseed price is double that of wheat.
Rapeseed oil pipeline
On September 6, the governments of Ukraine and Poland signed a deal in Kiev to build a pipeline for rapeseed oil. This runs from Ukraine to the Polish port city of Gdansk, so that it can be exported from there across the Baltic Sea. According to Agriculture Minister Vysotsky – who calls the project unique in the world – the pipeline has a planned capacity of 2 million tons per year. The pipeline should be put into use next season.