Forecasts of a good rape harvest in Ukraine in 2024 increase the pressure on quotations

"APK-Inform" experts have increased the forecast of rapeseed production in Ukraine in 2024 by 4% to 4.3 million tons compared to previous estimates, which will be 7% less than in 2023. The forecast has been adjusted due to a 4% increase in the estimate of the sowing area to 1.49 million hectares, while last year rapeseed was sown by 4% more.

The forecast for rapeseed exports in 2024/25 FY has also been increased by 2% to 3.6 million tons, which will be only 2% less than the 2023/24 FY.

Currently, rapeseed is entering the active flowering phase in almost the entire territory of Ukraine, which this year, thanks to the warm spring, came earlier than usual.

Rapeseed crops after the winter were mostly in good or satisfactory condition, but the lack of soil moisture in March and early April raised concerns about a decrease in crop potential. Therefore, the precipitation that has passed in the past few days has replenished moisture reserves and reduced the concerns of farmers.

In recent years, the popularity of rapeseed in Ukraine has grown significantly due to high demand from European buyers. Therefore, it is now a highly liquid crop that allows agricultural producers to receive funds quickly.

May canola futures on the MATIF exchange fell 2.4% to €448.25/t this week, and will continue to fall amid strong old-crop stocks in Europe and fast maturing of the new crop as the growing season is 2-3 weeks away ahead of average terms. August futures for new-crop rapeseed fell to old-crop prices of €449/t or $479/t and will continue to fall under the pressure of lower oil and vegetable oil prices.

May canola futures on the Winnipeg exchange fell 3.9% this week to CAD 611/t, or $444/t, amid lower US soybean oil prices and demand for biodiesel. Low canola prices improve the prospects for its deliveries to the EU already in the current season, which restrains the growth of canola prices in Europe.

A reduction in rapeseed production in the EU by 2% according to the European Commission's estimates or by 10% according to the forecast of Strategie Grains improves the prospects for the export of Ukrainian rapeseed. However, according to the FAS USDA forecast, Australia can increase canola production by 14% in 2024, and Australian and Canadian canola are direct competitors of Ukrainian rapeseed on the EU market.