Rapeseed prices fall under pressure from rising supply and falling canola prices

Improved weather and canola harvest conditions in Canada, higher crop forecasts in Australia and an increased crop forecast in the EU are putting pressure on rapeseed and canola quotes. Additional negative factors were falling soybean prices in Chicago and a seasonal increase in sunflower supply.

 

We predicted that in October the oilseed market would face an increase in the supply of rapeseed, soybeans, and sunflowers, and with favorable weather for soybean sowing in Brazil, quotes would begin to decline even despite high oil prices.

 

As of September 21-22, canola in Canada had been harvested on 43% of the area in Manitoba, 26% in Saskatchewan, and only 15% in Alberta. The slow pace of the harvest supported speculative increases in quotes, but dry and warm weather last week allowed the harvest to accelerate significantly.

Forecasts for this week promise precipitation mainly in Manitoba, so Canadian farmers are expected to be able to harvest most of their canola before the onset of frost, which usually comes around October 15.

November canola futures on the Winnipeg Exchange fell 2.3% yesterday to CAD 809/t or $570/t (-3.2% for the week and -0.6% for the month), further pressured by a 2.4% drop in Chicago soybeans. However, canola is still trading 24% more expensive than a year ago.

 

November Brent futures remain high at around $105/barrel, continuing to support rapeseed prices. At the same time, increased diplomatic contacts between the US and Iran and the gradual resumption of oil flows from the Persian Gulf increase the potential for a correction in oil prices.

November rapeseed futures in Paris fell 2.1% yesterday to €536.5/t or $610/t (-3.7% for the week and -1.8% for the month) amid falling Canadian quotes and a seasonal increase in oilseed supply.

 

In Ukraine, most processors have already switched to processing sunflower, so the demand for rapeseed is decreasing. The purchase prices of factories have already fallen by 500–1000 UAH/t to 19,000–20,000 UAH/t with delivery to the enterprise.

Export demand prices for rapeseed during the week remained at the level of $500–520/t or UAH 22,000–22,500/t with delivery to Danube ports and $500–520/t or UAH 22,000–23,000/t with delivery to western border terminals.

Demand prices for Ukrainian rapeseed delivered by dump trucks to the port of Constanta in Romania have decreased to $580–590/t, in particular due to the decline in the euro to dollar exchange rate, which also increases pressure on the domestic market.

 

In the 24 days of September, Ukraine exported 341,000 tons of rapeseed, compared to 292.6 thousand tons in August, as well as 115,000 tons of rapeseed oil. In the last week alone, rapeseed exports reached 145,000 tons, confirming expectations of high deliveries in September.

 

The increase in the cost of export logistics, together with the decrease in world prices, will continue to put pressure on domestic prices for rapeseed and its processed products. Therefore, the potential for further reduction in purchase prices in Ukraine remains in the near future.