W21: Canola & Rapeseed Update

In W21 in the canola landscape, the EU rapeseed crop is expected to produce 20MMT in 2023, 464K MT more than in 2022, and the second-highest output on record. France and Germany continue to be the top two producers of rapeseed in the EU. The German rapeseed harvest is anticipated to rise by 232K MT to 4.5MMT in 2023. A larger rapeseed harvest is also anticipated in France, coming in slightly under 4.6MMMT. Furthermore, Romania's rapeseed crop is anticipated to increase to about 1.6 MMT, the highest total in six years and a 33% YoY increase from the drought year of 2022. However, the rapeseed crop in Poland, the third-largest producer in the EU, is anticipated to decline by 8% YoY to 3.4MMT. The European rapeseed market was on a bad streak on Monday, May 22, as the price reached its lowest level in about 3.5 years. Rapeseed for delivery in August on the Paris Stock Exchange fell by 0.8% to USD 420.11/MT, a drop of 52.4% YoY. On Tuesday, May 23, rapeseed rose 0.1% to USD 420.64/MT but dropped 16.8% MoM. The increase in the estimated EU rapeseed yield estimate from 3.31 to 3.34 MT/ha, which will be 8% higher than the 5-year average, put pressure on the quote. On May 24, the rapeseed price approached USD 426.93/MT, an increase of 1.5%. Meanwhile, on the Winnipeg stock exchange, July canola futures fell 3.6% MoM to USD 514.74/MT, driven by delayed Canadian canola planting and expectations for domestic canola processing to rise 50% to 16.8MMT in 2025/26. Canadian canola continued falling by 0.5% to USD 511.85/MT on Wednesday, May 24 and decreased by 41.1% YoY.

The European Commission declared that it is prepared to extend import restrictions on rapeseed, sunflower, wheat, and maize from Ukraine after June 5 after the decision to extend the duty-free regime (independent trade measures) for an additional year. If this occurs, Ukraine will have a significant issue, as 52% of its total 2022/23 rapeseed exports were to these five countries. The embargo may also prompt Ukrainians to begin domestically processing rapeseed and sunflower seeds to export the completed goods, such as rapeseed oil and meal. According to PSPO, these actions will cause Polish rapeseed prices to fall below European quotations as well as a general decline in purchasing activity during the most vulnerable time for agriculture. Current market estimates indicate a high harvest of oilseeds in Ukraine in the 2023/2024 season. Out of the estimated 21.4MMT of oilseeds, around 8MMT are to be exported unprocessed. Despite the war conditions, the area of rapeseed crops in Ukraine is approximately 1.4M hectares. In the UK, larger-than-expected rapeseed harvests last season and this season are expected to buffer the impacts of the Russia-Ukraine war. The total rapeseed area in 2023/24 is forecast to increase for the second consecutive year but remain significantly below record levels due to the loss of some pesticides following the war. Meanwhile, rapeseed oil production is forecast to increase to 1.38MMT.