For the first time in 25 years, the prices of rapeseed oil in the EU have fallen below those of palm oil
According to Mintec Analytics, for the first time in 25 years, EU rapeseed oil has become cheaper than palm oil, which is usually the lowest priced of the four main oils (rapeseed, sunflower, soybean and palm) and serves as a benchmark for market participants. Thus, as of March 16, rapeseed oil prices fell to the lowest level since January 2021 - €929.5/t FOB Rotterdam, while the price of crude palm oil was €951/t CIF Rotterdam.
The reason was oversaturation of the EU market, as local processors bought large batches of rapeseed in Ukraine, 50% of which were processed in the EU. Purchases were made at a relatively low price, which ensured an increase in margins and sales volume. Despite the import of significant batches of rapeseed to the EU, the demand for rapeseed oil remains low, both from the biodiesel industry and from the food industry. Most food producers bought rapeseed oil as an alternative to sunflower oil because they expected supply disruptions due to the war between Ukraine and Russia, which are the main producers and exporters of sunflower oil. In addition, some buyers have entered into long-term agreements at high prices to secure supplies, so they continue to receive rapeseed oil, which further reduces demand for it. Given this, market participants do not expect an increase in demand for rapeseed oil in the near future, so its prices will remain lower than palm oil.
"There is no demand for rapeseed oil, and the forecasts of rapeseed production in the EU are good. There is no demand for oil from the biodiesel industry, as rapeseed methyl ester prices continue to fall and stocks are quite large," Mintec reports.
Despite dry conditions in France and Germany, the state of crops is not yet a concern for traders, but concerns may intensify in the near future. Currently, winter rapeseed crops in the EU amount to 5.92-6.02 million hectares, from which 19.32 million tons of rapeseed are expected to be harvested in July, which will be the highest figure for the EU-27 in the last 5 years.