Canola and canola prices continue to recover after falling

Rape and canola prices fell to "pre-war" levels last week, but have risen 5% over the past three sessions amid recovery in oil and palm oil prices.

The Indonesian government has decided to increase the biodiesel blending mandate from the current B30 to B35 (biodiesel content of 35%) from July 20, which will increase domestic consumption of palm oil.

This will lead to further gains in palm oil futures, which stabilized at 4,150 ringgit/t or $937/t last week, and will support canola and canola markets.

Over three sessions, November canola futures rose 5% to CAD 867/t or $665/t. Weather in Canada is helping the crop to form, and markets are hoping for increased demand from China, especially amid falling global prices.

August rapeseed futures on the Paris MATIF rose 5.2% or €34.75/t to €698/t or $700/t in four sessions, almost reversing the decline since early July. Prices are supported by the decline of the euro exchange rate against the dollar to the lowest level in 20 years – 1.003 $/€.

In 2021/22, the EU Ministry of Agriculture reduced rapeseed imports by 15% compared to the previous season, from 6.5 to 5.51 million tons. Almost 53% of this volume, or 2.9 million tons, was supplied by Australia, which significantly increased production, another 30% or 1.66 million tons - Ukraine, and 611.2 thousand tons - Canada. The main buyers were Belgium (1.47 million tons), the Netherlands (1.4 million tons), Germany (1.15 million tons) and France (1.12 million tons).

Resumption of production in the new season will allow to increase the export of rapeseed from Ukraine to last year's level of 2 million tons and canola from Canada to 2 million tons, as canola production in Australia will decrease somewhat.

In Ukraine, rape began to be harvested, but international traders have not yet resumed purchases, so domestic purchase prices have dropped to UAH 11,000-13,000/t ($376-445/t) EXW - elevators. At the same time, the demand prices with delivery to Germany or Poland followed the global ones and increased from $600-620/t to $650-675/t. The restoration of shipping from the small ports of the Danube to the Black Sea will improve logistics, but will not allow traders to conduct active procurement until they have full calculations of the cost of supplies.