Rapeseed prices in Europe rose by 2.6% on forecasts of growth in demand from the biofuel industry

Yesterday on the Euronext exchange, August rapeseed futures almost recouped the fall of the last two weeks and rose by 2.6% or 13 €/ton to 507.5 €/ton or 605 € /ton on the news of Germany's adoption of a law obliging to increase the reduction of greenhouse gas emissions in 2022 from 6% to 7%, and in 2030 to 25%. Therefore, the demand for rapeseed oil for biodiesel production will increase dramatically, especially given the commitment to reduce the use of palm oil. Following the adoption of the greenhouse gas emission quotas act, the German authorities introduced a new version of the Renewable Energy Directive (REDII) into national legislation.

Last year, Germany used almost 3 million tons of biodiesel and hydrogenated vegetable oil (HVO) to meet the greenhouse gas quota, of which 1 million tons of biodiesel was produced from used oil. But after the introduction of REDII, quotas for mixing bio-kerosene (based on HVO) will be introduced in the respective countries, which will increase the demand for rapeseed oil in Germany and in the EU as a whole. The reduction in the use of palm oil in the production of biofuels provided for by EU legislation has been postponed to 2023, but in 2022 the share of such biofuels is limited to 0.9%.

An increase in the fine from 460 to 600 euros per ton of CO2 will force market participants to comply with the new rules.

European quotes were supported by the Chicago Stock Exchange, where November canola futures rose 2.5% yesterday to 730.9 CAD/ton or 5 593.8/ton, adding 5.2% of the price for the week on forecasts of hot weather without precipitation in the Canadian Prairies over the next two weeks. Moisture reserves are still sufficient for canola sowing, but a lack of precipitation can delay the development of crops.

Increasing the production and use of electric vehicles will reduce the demand for automotive fuel, including biodiesel. So, Audi announced that in 2021 the number of electric vehicles produced will exceed the number of cars with internal combustion engines, and from 2030 it will generally complete the production of the latter in the EU. Earlier, other manufacturers also reported their intentions to abandon the production of cars with internal combustion engines. So, the Swedish Volvo plans to do this by 2030, the American concern General Motors – by 2035, Mercedes-Benz Daimler – by 2039, and Volkswagen – by 2040.