Veg oil prices subsides after yielding results in the Black sea

Crude Canola Oil & Rapeseed Oil

Uruguay

Market & Price Trends

Caio Alves

Published Jun 11, 2021

Weather in Canada and the usage of rapeseed in biofuel, as well as demand from China will be critical in the short term, while pointing out a market direction for the RSO balance for the upcoming weeks. Currently 21/22 season remains very tight with crushing in the EU at full swing, and exports at a good pace due to consistent purchasing from China. Historically China owns a high share of rapeseed purchases in total oils. As for what we have seen in the Great White North, stocks in Canada are ending up to be very low this season, and in combination to the exporting EU, we may have a scarce supply up ahead.

Despite the tight balance we saw the RSO prices to decline in the last few days, led by pressures suffered on the SFO rates, accumulating an abrupt shortfall in the last month, a combination of a cooling off demand globally and a increasing crop estimate at the main producing regions.

For the sunflower oil, eyes are now lying on the Blacksea croplands , where a very good planting progresses in both Ukraine and Russia. According to Oil World, we could also see more area than expected in both countries, as well as in Moldova, Kazakhstan and Romania.
If that firms, the production increase in the 2 main producing countries could be outputting volumes higher than expected, resuming +3.9 MMT. If that sustains sunflower prices shall continue its nosedive from where it came almost a year ago.

On another hand, the Uruguayan farmers have been gradually gaining technical domain knowledge since the last decade and becoming stronger year after year in the cultivar of rapeseed, yielding a good crop for the current campaign. The oleaginous plant, whose seeds are used to produce oil for human consumption and also to make biodiesel has been receiving incentives from Alcoholes del Uruguay (ALUR) as the main driver of the canola production due to its interest in biofuel.

FOB Canola oil prices in Montevideo closed today at U$S 1560/ton for the CRSO and U$S 1730/mt for the RRSO.

For this year's campaign, MGAP estimated a sowing of 111,241 hectares for rapeseed and carinata (Abyssinian mustard) put together