New crop canola prices are falling under pressure from low vegetable oil prices

Experts continue to raise forecasts for the EU and Ukraine rape harvest in 2023, but unsold rape stocks of European farmers are putting pressure on the prices of the old and new crops, especially against the background of a significant reduction in vegetable oil prices due to a sharp reduction in demand.

August rapeseed futures on Euronext fell 3% this week to the lowest since July 2021 at €403.5/t or $435/t.

Meanwhile, on the Winnipeg exchange, July canola futures rose slightly at the start of the week amid delays in canola planting, but then fell again, down 1.4% for the week to CAD703/t, or $521/t.

In Ukraine, rapeseed forward prices remain at a low level of 320-330 $/t with delivery to the port due to uncertainty with the operation of Black Sea ports after July 18 and low demand from exporters, while for August deliveries to the EU, exporters are offering 390 €/t, which corresponds to the current level of rapeseed prices in Europe.

On the Rotterdam Stock Exchange, rapeseed oil prices continue to fall due to reduced demand from the biofuels industry. According to Oil World, in two weeks they fell by 10% or $100/t to $900/t, while in early February they reached $1,160-1,180/t.

Oil World experts believe that the reason for the drop in prices is the large volume of oil offers on the EU market. As a result, the discount compared to the price of crude palm oil was an unusually high $50/t, although as recently as May 2022, the oil premium was $490/t. Moreover, at a discount of $40/t compared to Argentine soybean oil, European canola oil can increase its share in the markets of the main importing countries.

July futures for soybean oil on the exchange in Chicago fell by 4.6% to $1,042/t (-16.8% for the month) from Monday on the background of high rates of sowing of soybeans in the USA.

During the week, palm oil futures in Malaysia fell amid forecasts of increased production. The continuation of the grain corridor improves the prospects for the activation of global supplies.

August palm oil futures on Bursa Malaysia yesterday fell 1.14% or 39 ringgit/t to a 20-day low of 3,395 ringgit/t or $765/t.