Prices for oilseed rape growing because of lower crop forecasts in Ukraine and the EU

the Dry conditions, which reduce the yield potential of canola in most areas of the EU, and in Ukraine led to a partial loss of crops, leaving uncertain the prospects for future harvest. The decrease in forecast rapeseed production in the EU in yesterday's European Commission report led to the rise in the cost of the August futures for rape in Paris on 4 t to 374 €/t or a $408/t

the Experts in the may WASDE report increased the forecast of the world rapeseed production by 2.5 million tonnes to 70,79 mln t, in particular for Ukraine 0,535 up to 4 million tonnes, which surprised analysts. In 2019/20 MG in Ukraine planted winter rapeseed 1.3 million hectares have been collected 3.4 million tons of projected 3,6-3,9 million tons for the harvest 2020 sown only 1,091 million hectares, and autumn drought led to the loss of crops and worsened the condition. The loss of crops, according to ISG, thanks to the warm winter was only 125 thousand hectares, and area for harvest is estimated at 966 thousand hectares. Even if last year's yield of 2.6 t/ha for rapeseed production in Ukraine will not exceed 2.5-2.6 million tonnes, whereas in 2018/19 MG it amounted to 2.8 million tonnes, of which 2,452 million tons were exported.

In its monthly report, the MARS reported that winter crops in most regions of Europe except the Northern, the Atlantic and the Mediterranean countries suffer from soil moisture deficit on the background of above normal temperatures, resulting in slowed plant development. Dry weather of April and may during the flowering and early filling of the canola has reduced crop potential.

Therefore, the forecasts of production of main winter crops in the EU in 2020 have decreased compared to April:

the

barley by 4.9% to 5.63 million tonnes, which is 2% below the average 5-year level

rape of 6.1% to 2.95 million tonnes, which is 4.4% below the average 5-year level.

• wheat – 2.6% to 5.72 million tonnes, which is 0.9% below the average 5-year rate,

In Ukraine, the forward rates for rape remain at the level of 390 $/t for deliveries to the port in July-August, but producers are not in a hurry contractualise, despite the improvement of the condition of crops after the recent rain.

Recovery in oil prices and the likely increase in the consumption of biofuels offer significant hope for growth in demand for rapeseed from the biodiesel industry, which at the end of July-August will support prices.