Rapeseed prices in Ukraine are falling due to a new attempt by Verkhovna Rada deputies to introduce a 10% duty on rapeseed and soybean exports

On July 15, the Verkhovna Rada may return to considering the "soybean-rape" amendments as part of the bill, which provides for changes to the Tax Code to prevent industrial pollution, which has already led to a sharp decrease in export hryvnia prices for rapeseed in Ukraine.

Let us recall that last week the Verkhovna Rada did not support bill 13157, which contained "soybean-rapeseed" amendments, but the deputies continue to insist on restricting exports under the pretext of increasing processing in Ukraine.

Voting on “foreign” bills naturally causes surprise, since duties should be introduced by a separate document or by amending the Customs and Tax Codes. However, the logic of the deputies is simple: the documents have already passed the first reading, so they can be adopted under an accelerated procedure. In an interview with Latifundist.com, the co-author of the first amendment, Andriy Motovylovets, explained this, in particular, by the fact that the raw material (in this case, rapeseed) leaves the country from July 1.

Export demand prices for rapeseed in Ukraine this week decreased to 24,200-25,000 UAH/t or $530-535/t with delivery to ports, and some traders stopped purchasing altogether.

The introduction of duties on rapeseed may limit the price in hryvnia, but on the other hand, it will lead to an increase in prices on the exchange, which will offset the cost of the duty.

It is also necessary to take into account that the introduction of restrictions on rapeseed exports will worsen relations with Ukraine's main ally in the war against the Russian Federation, especially against the background of the Trump Administration halting arms supplies.

EU officials also said that in response to the rapeseed tariffs, they may impose duties on Ukrainian rapeseed meal and rapeseed oil, which would make it unprofitable to process rapeseed in Ukraine and supply the EU with processed products. EU processors have subsidies for biofuel production, so they will always be in a much better situation than rapeseed processors in Ukraine.

August rapeseed futures on the Paris exchange yesterday fell 1.7% to €461/t or $543/t (-3.8% month-on-month) following a 2.1% decline in July canola futures to CAD709/t or $522/t (+2% month-on-month) amid reduced processing volumes.

The strengthening of the Canadian dollar against the US dollar has greatly increased the cost of Canadian canola in dollars, and the price difference between canola and rapeseed has decreased to $21/t (although in the spring it reached $140/t), which has greatly worsened the prospects for canola imports to the EU.

According to Oil World, in May, the volume of canola processing in Canada decreased compared to April from 919 thousand tons to an 11-month low of 831 thousand tons (920 thousand tons in May 2024).

The reduction in domestic canola stocks in Canada and global demand for Canadian canola meal, caused by China's imposition of a 100% import tariff in March, was the main reason for the reduction in Canadian canola processing volumes.