W2: Weekly Canola & Rapeseed Update
Global
The downward trend in January rapeseed prices continued on January 9 in Paris, where February rapeseed futures fell 2.3% to USD 605.4/MT, matching December's level but falling 3.5% less than the level at the start of the year. Prices are under pressure as more canola enters the market from Canada and Australia, especially given the anticipated growth in planted areas in the EU. According to projections, increasing the sowing area from 5.85 million to 5.94 million hectares will allow EU countries to increase rapeseed production from 19.1MMT in 2022 to 19.6MMT in 2023.
Due to an 11% increase in sowing area, Australia is expected to produce 7.3 MMT of rapeseed in 2022/23, which will be 4% more than the crop that set the record in 2021/22. The canola crop was in the best condition it had been in more than 20 years due to abundant rains throughout the growing season, so the final harvest may be greater than expected. Additionally, Australia's rapeseed harvesting is anticipated to end in January. Rapeseed planting in India is nearing completion, and acreage may rise by 5% over the previous year, which will improve production. Plant growth is favoured by the weather, and harvesting will start in March.
Europe
German Experts Expect an Increase in the Rapeseed Crop in the EU
The EU will continue to actively develop the production of rapeseed, which is the main oilseed crop for the block countries. Analysts predict that as a result, the gross harvest of oilseeds could reach 19.6MMT in 2023, an increase of 500,000MT. The expansion of sown areas to a maximum over the past five years, reaching 5.94M hectares in 2023 compared to 5.85M hectares in 2022, will be the main reason for the increase in yield. Experts predict that French and German farmers will increase the area planted with rapeseed by up to 1.31M hectares compared to 1.23M in 2021 and 1.15M hectares compared to 1.08M hectares in 2021, respectively. Rapeseed production in France and Germany may also increase by 1% YoY to 4.55MMT and 3% YoY to 4.40MMT, respectively.
Canada
Canada Is Increasing Oilseed Exports in 2022/23 MY
According to analysts at Statistics Canada's National Statistical Service, the country sold more than 20.6MMT of grain, oilseeds, and legumes to international markets in the first five months of the 2022/23 season (August–December), a 34.6% increase compared to the 15.3MMT sold during the same time period in the 2021/22 season. In particular, 3.5 MMT of canola have been exported since the beginning of August, compared to 2.9 MMT in the first five months of the 2021/22 MY.
On the SWOT Exchange, Oats and Rice Quotes Lost From 3% To 6%
Oats, uncooked rice, and Canadian rapeseed all experienced disparate price movements on the SWOT and ICE exchanges. By January 6, Canadian rapeseed had increased 0.4% WoW, going from USD 641.42/MT to USD 643.96/MT, while oat prices had decreased 6.7% WoW, going from USD 3.67 to USD 3.44 per bushel, and rice quotes had decreased 6.7% WoW, going from USD 18.05 to USD 17.49 per centner.
Ukraine
First Estimates of Ukraine’s 2023 Oil Seed Harvest
The decline in farming margins in 2022/23 forces Ukrainian farmers to implement a strategy that lowers production costs and increases the area of the most lucrative crops for the harvest in 2023. The winter rapeseed area for the 2023 harvest is down 29% YoY after its expansion in 2021. About 1M ha were planted by farmers, which is a slight decrease for Ukraine. For 2023, growers are being urged more and more to plant oilseeds. Other parts of Ukraine helped to partially offset the decline in winter rapeseed plantings in the south and north.
In the first days of 2023, the weather was unusually warm, and weak plant vegetation was observed everywhere in the winter crops and rapeseed crops in Ukraine, which had a negative impact on the hardening of the winter crops. Pathogens of peronosporosis, alternariosis, phomosis, powdery mildew, and focal bacteriosis progress in the Ternopil region due to fluctuations in temperature indicators and the reserve of infection, which cover 1-6, max. 11-17% of plants. Additionally, 2-3% of the plants in some Ternopil region farms' thickened rapeseed crops displayed a manifestation of snow mould.
Russia
Udmurtia Sent Almost 2,000MT of Rapeseed Oil to China in 2022
More than 560MT of rapeseed oil were shipped from two Udmurt Republic regions to the Chinese market in December 2022. In total, Udmurtia exported nearly 1,900MT of rapeseed oil to China in 2022. Experts previously predicted that domestic rapeseed oil exports would increase in 2022, with an eastward trend.
Krasnoyarsk Agrarians in 2022 Exported the Most Grain to Belarus and China
In 2022, Kazakhstan, Belarus, and China were the top destinations for grain and oilseed exports from the Krasnoyarsk Territory. A substantial portion of the grain and oilseed production in Krasnoyarsk in 2022 was sent to Belarus, including 78,500 MT of rapeseed, followed by 10,700 MT of rapeseed to China and 1,300 MT to Kazakhstan. Rapeseed accounts for the majority of exports, accounting for around 90,500MT, followed by oats with 15,700MT and wheat with 5,900MT. The Pskov, Leningrad, and Chelyabinsk areas, Primorsky Territory, and St. Petersburg were the main Russian regions receiving grain supplies from the Krasnoyarsk Territory.
Severe Frosts Did Not Harm Crops in the Stavropol Territory
99% of the areas in the region where winter crops were sown sprouted. Winter harvests were unaffected by the frost that formed on the Stavropol Territory's land and by some regions' lack of snow. Furthermore, according to the head of the regional Ministry of Agriculture, 98% of the 97,100 hectares of rapeseed sown had sprouted.
Turkey
Taxes on Grains, Oilseeds and Crude Oils Have Been Reduced to Zero in Turkey
The Turkish government reduced customs duties on imports to 0% for wheat, corn, and barley until April 30, 2023, and until May 31, 2023, for safflower, sunflower (crude oil, seeds), and canola. Before 2023, Turkey applied a tax of USD 250/MT to the imports of crude sunflower oil and a 5% tax on sunflower seeds.
Although the zeroing of customs duties could positively impact oil prices, it is likely to negatively affect the livestock sector. While oil prices are expected to decrease, feed prices are predicted to rise as fewer oilseed byproducts are likely to be available since crude oil imports are more advantageous now. Thus, it is expected that a 10-15% discount will be reflected in the market prices of oils with zero customs duty on FEB.
