Rapeseed prices rose 9.2% for the week amid drought in the US and Canada and forecasts of a reduced crop in Australia

Weather factors added to speculative pressure on soybeans last week, followed by canola, although prices remain well below a year ago.

August rapeseed futures on the Paris exchange were up 9.2% for the week at €473.5/t or $517.8/t, adding 23% since the start of the month, although they fell to their lowest since April 2021 on May 30 p level – 385 €/t. A year ago, rapeseed futures traded at €675/t, despite forecasts of a good global rapeseed harvest in 2022/23 MY.

The main driver of the rise in canola prices last week was a decline in canola production forecasts in Australia. In a new report, the Australian Bureau of Agricultural and Natural Resource Economics (ABARES) lowered its canola crop forecast to 4.9 million tonnes, well below the record 8.2 million tonnes for the 2022/23 season.

The reason for the adjustment will be this year's drought caused by the El Nino phenomenon, which will end a three-year streak of record harvests, as well as a reduction in planted areas. In the main agricultural regions of Australia, autumn rains replenished soil moisture reserves and provided conditions for canola planting, but in the north the amount of precipitation was insufficient.

June's dry weather across much of North America led to a sharp spike in speculative prices for soybeans in Chicago and canola in Winnipeg.

Overall, the weather has been favorable for canola planting in Canada, and crops are in good shape now, but analysts are predicting a lack of rainfall in the second half of June, particularly in the eastern Prairies.

November canola futures on the Winnipeg exchange were up 6.8% for the week at CAD710/t, or $537/t.

The premium for November Canadian canola futures over European canola futures hit a record high of $92/t, but has now eased to $20/t, although it needs to be at least $30-50/t to enter the EU market .

In 2022/23, the EU imported 7.16 million tons of rapeseed, including 48.6% or 3.477 million tons from Australia, 41.4% or 2.96 million tons from Ukraine, and only 3.2% or 230 thousand t - from Canada (compared with last year's 611,000 t).

In Ukraine, forward rapeseed prices remain at a low level of $320-330/t with delivery to the Danube ports, as it is not known how the Black Sea ports will work after July 18. For deliveries to the EU, exporters offer €390-400/t, but only with delivery in September-November.