Australia and Canada expect increased demand for canola from the EU in the new season

Experts of Oil World (Germany) reduced the forecast of rapeseed production in the EU in 2024 to 17.6 million tons (20 million tons in 2023), as long rains in France and Germany negatively affect crops. And the European Commission predicts a decrease in production to 18.38 million tons. Therefore, Australian analysts expect an increase in the demand for canola from the EU in the current season.

At the same time, Oil World warns of a possible reduction in supplies of sunflower and rapeseed oil from the Black Sea region as a result of unfavorable weather conditions, which will be partially offset by an increase in soybean oil imports.

The increase in demand for canola will be facilitated by the temporary anti-dumping duties introduced by the European Commission against Chinese biodiesel and renewable fuel, which will take effect on August 16. 39 Chinese exporters of biodiesel will be taxed with an anti-dumping duty of 36.4%, three more will receive rates in the range of 12.8-36.4%, and for companies that contributed to the EC investigation, the duty will be 23.7%. At the same time, Chinese environmentally friendly aviation fuel will not be subject to tariffs.

According to the European Biodiesel Council (EBV), in 2023, China supplied the EU with 1.8 million tons of biodiesel, or 10% of total consumption. Cuts in Chinese supplies will revive European biodiesel production and boost demand and support canola and canola prices, which is good news for Australian and Canadian exporters.

The next step of the European Commission may be the introduction of a duty on the import of Chinese used cooking oil, which will further support the demand and prices for rapeseed.

In Australia, the weather is helping to produce a good canola crop, while dry weather in July in Canada sent canola futures up significantly last week. During July 17-23 in Alberta, the number of canola crops in good or excellent condition decreased compared to the previous week from 71.8% to 48.6%. In Saskatchewan, the moisture content of the upper layer of the soil was 50% due to the prolonged effect of high temperatures and a lack of precipitation.

But the other day there were rains in the prairies, which reduced the heat, which immediately affected the quotation. November canola futures on the Winnipeg exchange fell 10% for the week to CAD 610/t or $440/t (-6.6% for the month), adding pressure to quotes in Paris.