Canola prices fell 4% amid accelerated planting in Canada and a 3.4% drop in oil prices

The drop in oil prices by 3.4% to a 3-month low led to a sharp collapse in global quotations for vegetable oils and rapeseed.

August Brent oil futures on the London ICE Futures exchange yesterday fell by 3.4% to $78.4/barrel (-7.1% over 4 sessions). The drop in prices was exacerbated by the unexpected decision of OPEC+ to resume oil production in the 4th quarter, as well as negative data on the US economy. The May ISM manufacturing index unexpectedly fell by 0.5 to 48.7, although experts expected it to rise to 49.5. In addition, construction spending fell 0.1% in April against expectations for a 0.2% increase.

On the Winnipeg exchange, July canola futures yesterday fell 4% to CAD 635/t or $465/t (-4% for the month), while November canola fell 3.9% to CAD 657/t or $482/t t (-2.7% for the month) against the background of falling oil prices and forecasts of dry weather in the prairies, which will allow canola planting to be completed.

As of May 27, in Saskatchewan, 71% of the planned area was planted with canola, in Alberta - 67% of the area, in Manitoba (as of May 20) - 20% of the area, which is slightly lower than the 5-year average.

August rapeseed futures on the Paris MATIF fell 1.7% yesterday to €479.25/t or $523/t (-2% for the week, +4.6% for the month).

European rapeseed prices are supported by the European Commission's reduction of the forecast for rapeseed production in the EU in 2024/25 FY by 0.3 million tons to 19.1 million tons (19.7 million tons in 2023/24 FY).

In addition, Australia's ABARES lowered its forecast for the country's 2024/25 canola crop from 6.1 to 5.4 million tonnes, which would be 5% below last year's figure but 21% above the 10-year average.

In Ukraine, new harvest rapeseed prices remain at $420-450/t with delivery to Black Sea ports and €400-405/t at the DAP border, but demand prices for delivery to the EU have risen to €440-460/t.

A further reduction in biodiesel demand could negatively impact EU rapeseed prices, especially given the possible increase in supplies of cheap canola from Canada.