Completion of Canola Sowing in Canada Under Favorable Conditions Accelerates Decline in Rapeseed Prices on Exchanges and in Ukraine

Despite cool and rainy weather in Canada, as of June 10, farmers have nearly completed canola sowing, which immediately led to a sharp drop in prices on the exchange. This is due to large stocks of unsold last year's harvest and currently optimistic prospects for the new crop.

On the Winnipeg Exchange on Friday, July canola futures fell by 3.6% to 605 CAD/ton or 440 USD/ton, showing a 10% drop for the month to a three-month low, while November futures fell by 2.5% to 624.6 CAD/ton or 455 USD/ton (-9% for the month). Funds began to shift their positions towards the November contract as demand for rapeseed decreases amid the approaching harvest in the EU and falling prices for rapeseed and soybean oil.

Soybean planting in the US is almost complete, and the condition of soybean crops is rated at 70% good to excellent compared to 54% a year ago. This caused the November soybean futures in Chicago to drop by 1.8% yesterday and is putting additional pressure on canola prices.

On the MATIF exchange in Paris, August rapeseed futures fell by 2.4% yesterday to 457 €/ton or 490 USD/ton (-2.6% for the week, -4.8% for the month), following the decline in canola prices.

Since the beginning of the 2023/24 marketing year, as of June 9, the EU has imported 5.2 million tons of rapeseed, which is 27% less than the corresponding figure for the 2022/23 marketing year, but there is a slight increase in supplies from Canada.

In Ukraine, the harvest of early grains has started, and rapeseed will begin to be harvested at the end of June, but yield forecasts remain significantly lower than last year's. Experts from MARS, in their June report, forecast the rapeseed harvest in Ukraine at nearly 4 million tons, which is 12% less than last year, but 16% higher compared to the 5-year average. The area is estimated at 1.5 million hectares, which is 16% more than the 5-year average.

Export demand prices for new crop rapeseed have decreased by 10-15 USD/ton to 400-420 USD/ton or 17,500-18,500 UAH/ton with delivery to Black Sea ports, but higher forward prices from a few weeks ago will still hold back sales from farmers. Demand prices for rapeseed with delivery to EU countries are offered at 460-465 €/ton, but with delivery in October-November, so Ukrainian farmers are in no hurry to contract volumes.

Rains in major canola-growing regions in Canada and Australia are improving crop prospects and will significantly pressure prices in the coming weeks.