Lower crop forecasts in Australia and Ukraine support rapeseed prices

Freezes and lack of precipitation in April and May in Ukraine, as well as dry weather at the beginning of planting in Australia, remain the main factors supporting canola and canola prices. Cold weather and rain in Canada are also delaying planting, although they are increasing soil moisture reserves.

 

Experts of the analytical center of the PUSK cooperative reported that "in some farms of Dnipropetrovsk, Kharkiv and Kirovohrad regions, up to 30-40% of rapeseed crops were damaged, although there is no official information about this yet. As a result, the rapeseed harvest in the new season will decrease to 4.1 million tons (4.7 million tons in 2023/24 MR), so its prices will be significantly higher than last year."

 

Traders are contracting new crop rape at $430-440/t with delivery to Black Sea ports, but sales rates are very low. For deliveries to Germany in August - September, 450-465 €/t are offered, but most buyers are ready to contract rape only for November against the background of active sales by local farmers.

 

August canola futures on the MATIF exchange in Paris rose to their highest level since July 2023 at €485/t on Monday, but yesterday fell 1.2% to €479.25/t or $520/t (+0.4% per week, +3.9% per month).

 

Dry weather in southern and western Australia could reduce canola yields, while heavy rains in the east will boost wheat production. Canola has been planted nationally for several weeks now, but while weather conditions are favorable in Queensland and much of New South Wales, the soil is very dry in Western and South Australia, so farmers may reduce canola acreage in favor of winter wheat and barley. In the state of Western Australia, more than 50% of the Australian canola crop is grown. According to forecasts, compared to last year, the area planted with canola in the country will decrease by 6% to 3.1 million hectares, and the harvest - by 5% to 5.4 million tons.

 

On the Winnipeg exchange, July canola futures this week rose 1.4% to CAD 665/t or $487/t (+3.9% on the month), while November futures rose 1.6% to CAD 685/t t or $502/t (+4.6% for the month) against the backdrop of delayed sowing and rising soybean prices in Chicago.

 

According to the Canadian Grain Commission, in FY 2023/24 (as of May 19), Canada exported 5.1 million tons of canola, which is 26% lower than last year's pace. It is expected that the canola harvest in the country will exceed last year's, so if farmers finish sowing in the optimal time, the sale of stocks will be intensified, including deliveries to the EU.

 

Oil prices fall as threats from Iran ease. This is likely to continue until the election of a new Iranian president, which will be held on June 28. July Brent oil futures during the week fell by 1.4% to $82.8/barrel (-3.9% for the month), and the announced allocation of 1 million barrels of gasoline from reserves by the US Presidential Administration to the Independence Day to increase domestic supply will further reduce the demand for oil and, accordingly, biodiesel.