The price of rapeseed on the European Matif futures market has experienced a significant downward revaluation in November. The price level is currently the lowest since August 2021. This is a remarkable movement in the vegetable oil markets as a whole. The market is hurting, especially in Europe. Yet it is not all negative.
On Friday, December 2, the Matif closed at €566,75 per tonne for the February contract. That is the lowest price in more than fifteen months. In one month the price has been depreciated by €110, a decrease of 16%. Compared to the price of soybeans, the rapeseed prices are not far out of line, but looking purely at the oil price it is remarkable.
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2,3 million tons more rapeseed
According to the latest figures from the European Commission, 19,4 million tons of rapeseed are expected for the coming harvest year. That is 2,3 million tons more than was harvested this year. That news was enough last week to further suppress the price on the Matif. A higher harvest expectation is partly due to more hectares of rapeseed and favorable crop development this autumn. Despite the drought, rapeseed has been able to benefit from high temperatures. As a result, the plots sown later have also matured well, despite local problems with insect damage, among other things.
Arable farmers have sown more hectares of rapeseed this summer, especially in France, Germany and Poland. Favorable market prospects after historically high market prices have encouraged growers to do this. The market price may have fallen, but in the long term it is still attractive. This also applies to other oil seeds such as sunflowers, which are also of great interest. Ukraine may have the production, but exports continue to falter. As long as this is the case, other countries can benefit from this market imbalance.
Canadian harvest
Canada, the third largest rapeseed producer in the world, will see its harvest increase by almost a third to 18,2 million tons in 2022. This is not surprising after the disastrously bad year 2021. The acreage fell according to new figures from Stat Canada by 3,9%, but the hectare yield is much higher. Yields of grains and rapeseed are also higher in Canada. A record harvest was even achieved in wheat.
Australia (number five in the rapeseed top ten) is struggling with a difficult harvest on the east coast. The La Nina weather pattern ensures that a lot of precipitation has fallen. Storms have also destroyed crops. Nevertheless, the record quantity of 7,3 million tons for this season remains. The quality standards for rapeseed have been adjusted downwards at the insistence of the Australian Oilseed Federation (AOF), otherwise too many batches would be rejected due to mold formation. The largest processor of rapeseed (GrainCorp) was forced to agree to the request.
Price above average
With all the rapeseed in the ground for a new season, arable farmers in Europe can now do little. On Monday, December 5, prices will again rise by several euros, both for the current harvest and the new one. A price level of €575 per ton for August delivery is still 39% above the five-year average. This offers good hedging opportunities. If the good European harvest does indeed materialize, the (price) pressure will only increase further.
A possible danger to oilseed rape in the EU is winter weather. With the start of meteorological winter, a cold wind has indeed started blowing. Especially in the north of Europe and the Central European countries, it means the arrival of colder weather and possibly also significant snowfall. This is not only necessary to replenish moisture reserves, but also to protect the 'tender' rapeseed crops (and also winter grains) should the mercury take a dip.