Declining rapeseed oil and meal prices in China will soon increase the pressure on the rapeseed market
Forecasts of a decline in demand for canola oil and meal in China amid increased supply of soybeans on the world market will increase pressure on canola prices in the near future.
After the Spring Festival, demand for oils and fats in China has decreased significantly, with canola oil falling the most among all types of oil, while canola meal may pick up slightly in the spring.
Currently, rapeseed oil demand prices are at RMB 10,000/t, or $1,450/t, but will continue to fall as rapeseed processing ramps up. Rapeseed meal prices are hovering around RMB 3,100-3,300/t, or $450-480/t, and could soon rise amid seasonal increases in consumption by fish and aquaculture producers.
Amid improved Sino-Canadian relations and increased canola production in Canada, China has sharply increased canola imports. In November, he purchased 476,700 tons, in December – 544,900 tons, in January – 715,000 tons, and in February he plans to purchase 620,000 tons. In total, for the specified period, rapeseed imports will amount to 2.3 million tons, which is twice as much will exceed the corresponding last year's indicator.
Increasing imports will increase canola processing and supply of processed products, which will increase competition between soybean meal and canola meal, the difference in spot price between which is 1,300 yuan/t or $188/t.
In the medium and long term, a two-fold increase in the supply of rapeseed oil and meal will lead to a decrease in the prices of these products. In addition, increased shipments of Brazil's record soybean crop to China in the second quarter will lower soybean meal prices, which will drag canola meal down.
According to Oil World experts, against the backdrop of an oversupply of rapeseed oil in the EU, its prices in Rotterdam fell to $1,167/t in February, which is 14% lower than the 3-month average and 36% (or $650/t) - January 2022 prices
Analysts believe that domestic demand for rapeseed oil in the EU did not meet market expectations. In the second quarter of the 2022/23 FY, the EU exported 155,000 tons of rapeseed oil, which is twice as much as during this period in the 2021/22 FY. At the same time, the import of oil during the same time reached 146,000 tons, so the actual export amounted to only 9,000 tons.
Against the background of strengthening soybean prices, March rapeseed futures on the Paris exchange during February rose by 2.4% to €558/t or $593/t (+6% for the month, -11% for the year), but March canola futures on the Winnipeg exchange rose just 1.2% to CAD 838/t or $615/t during the same period (+4% for the month, -2.6% for the year).
