Rape quotes on the Paris stock exchange rose by 2.7% amid uncertainty with the biofuel market
Despite lower oil and canola prices, oilseed rape quotes on the Paris exchange rose 2.7% yesterday to the highest level since July at €475.25/t, or $528/t, amid the EU government's intention to reduce the number of CO2 certificates, which will affect biofuel markets, as well as soy and palm oil imports.
Oil prices rose last week and supported vegetable oil prices, but on Monday they were down 1% on the prospect of a war between Israel and Lebanon or Iran. Israel continues to destroy Hezbollah warehouses with missiles and terrorists, and the Iranian president announced a review of relations with Western countries.
On Friday, Germany's MSG proposed to limit the validity of a large number of surplus CO 2 certificates for 2023 and 2024 until the end of 2024, although previously they could be used for another 2 years. A surplus of such certificates in the 4th quarter of 2024 will create uncertainty in the biofuel markets, which will significantly affect the rapeseed market, which depends on subsidies for biodiesel plants.
Also, the market expects the entry into force of the new EU Deforestation Regulation (EUDR) on December 30, 2024, which requires companies supplying cocoa, coffee, palm oil, soy, cattle, rubber and wood to the EU to guarantee that the production of products is not related with deforestation, and they are obtained from legal sources. Failure to comply with these requirements threatens companies with fines (40% of their turnover in the EU), product bans, reputational damage and disruptions in the supply chain. Traders must carry out a comprehensive verification of the data provided by farmers on the land on which soy and palm are grown and enter them into the EU information system with geolocation data of the fields where the products were grown. If traders do not have time to collect the necessary information, the supply of palm oil and soybeans may stop in early 2024.
Dry, warm weather across Canada's prairies is helping canola harvest, so November futures on the Winnipeg exchange fell to CAD 587/t, or $435/t, yesterday after last week's gain of 8%, matching last month's level.
In Australia, canola will begin to be harvested in 6 weeks, but traders have already started buying it for delivery to the EU.
In Ukraine, the number of traders buying rapeseed at the port is decreasing, and processors have switched to other oil crops, so farmers should take advantage of high prices to sell rapeseed before the start of turbulence in the EU biofuel market and increased canola supplies from Canada and Australia.
