Rapeseed prices in Ukraine continue to fall amid falling futures on exchanges

The complete halt in seaborne rapeseed exports from Ukraine led to a jump in stock prices the week before last, which triggered a sharp increase in rapeseed sales by European farmers. As a result, and against the backdrop of increasing supply from Ukraine with deliveries across the western borders, processing plants practically covered their raw material needs until November-December, which dramatically changed market trends and led to a drop in demand and lower prices.

 

October Brent crude futures fell another 2.4% to $84/barrel (+17% month-on-month) on promises to resume talks between the US and Iran, which also puts pressure on rapeseed prices.

 

In the second half of the season, markets will begin to react more actively to forecasts of reduced harvests and supplies from Australia.

 

November rapeseed futures on the Euronext Paris exchange fell by 2.5% to €523.5/t or $604/t (-6.8% in two weeks, +1.8% in the month) under pressure from falling oil prices and increasing physical supply of the new crop.

 

The appreciation of the euro against the dollar has increased dollar prices for rapeseed, which also supports prices in Ukraine.

 

On the ICE exchange in Winnipeg, November canola futures fell 4.2% to CAD 759/t or $540/t for the week, completely erasing the previous weeks' gains and returning to last month's level. The weather in Canada remains very favorable for canola planting, so the harvest forecast remains at a high level.

 

In Ukraine, domestic demand prices for rapeseed continue to fall due to the lack of sea exports of both rapeseed itself and its processed products, as well as against the backdrop of increasing logistics costs for delivery by road or rail to the EU across the western border.

 

During the week, demand prices for processors decreased by 1,000-1,500 UAH/t to 19,500-21,000 UAH/t with delivery to factories, and for exporters shipping rapeseed from domestic elevators to western terminals - by 1,000 UAH/t to 20,500-21,000 UAH/t EXW elevators.

 

Experts note that demand for rapeseed from exporters remains subdued due to limited shipment opportunities. At the same time, high logistics costs have hindered the reorientation to the western border, especially for raw materials grown in the south and other remote regions.

 

Against the backdrop of limited demand on the western border, demand prices were $540-560/t DAP, while in Danube ports demand prices collapsed to $470-490/t or 20,500-21,500 UAH/t, and in Black Sea ports similar prices were declared, although no purchases were made. Demand prices for rapeseed with delivery to the EU in September-October fell by €20-30/t to €500-520/t with delivery to factories.

 

As of August 3, 2.39 million tons of rapeseed have already been harvested in Ukraine from 910.6 thousand hectares or 68.4% of the projected area, with an average yield of 2.63 tons/hectare, so the harvest forecast remains at 3.5 million tons.

 

Markets do not expect a quick settlement of sea exports from Ukraine, so processors and traders are adjusting to supplies of rapeseed and meal to the EU through the western border, which does not allow increasing domestic purchase prices. Therefore, farmers will be forced to either sell rapeseed at low prices or postpone sales to the second half of the season.