W44: Canola & Rapeseed Update

In W44, in the canola landscape, the forecast for the European Union (EU) rapeseed production in the 2023/24 marketing year (MY) has been increased by 1.5% to 19.7 million metric tons (mmt), up from 19.5 mmt in the previous MY due to better-than-expected yields in Romania, France, and Germany. The supply outlook for rapeseed in the 2023/24 season is considered balanced, with increased harvest volume expected to be offset by reduced imports and additional demand driven by attractive crushing margins. The temporary ban on direct sales of Ukrainian grain in five eastern EU countries until September 15 also impacted EU rapeseed imports at the beginning of the season. The volume of rapeseed imports into the EU from July 1 to October 29 decreased by 37% year-on-year (YoY), totaling 1.49 mmt. Ukraine was the primary supplier to the bloc, contributing 883 thousand metric tons (mt), while Australia delivered 283 thousand mt, Moldova provided 193 thousand mt, Serbia contributed 74 thousand mt, and Canada shipped 42 thousand mt.

In Oct-23, global rapeseed and canola prices experienced declines of 6% month-on-month (MoM) and 4.2% MoM, respectively, due to increased crop forecasts in the EU and Canada due to favorable harvesting conditions. In the EU, rapeseed prices face pressure due to a robust harvest, ample reserves, and the availability of inexpensive rapeseed from Ukraine, with anticipated imports reaching 4 mmt this season. The postponement of rapeseed sales by European farmers to the new year is expected to boost supply volumes and prevent prices from falling.

In Ukraine, rapeseed stocks are currently at around 500 thousand mt. The country is grappling with logistical challenges in meeting contracted rapeseed export volumes due to delays in wagon deliveries and congestion in ports, partly caused by significant corn supplies to Romania and increased activity at Odessa ports. As of October 30, only 424 thousand mt of rapeseed were exported, trailing behind contracted amounts. Despite these challenges, 60 thousand mt of Ukrainian rapeseed oil were successfully sold to China in Nov-23, contributing to increased domestic demand. Sellers are showing restraint, anticipating higher prices, with market liquidity remaining low and conditional prices ranging from USD 389.82 to 403.74/mt. There's a possibility that sellers may delay sales until December in hopes of improved prices.

Lastly, increased rapeseed harvests in Russia and higher rapeseed oil supplies to China (100 thousand mt per month) are contributing to reduced demand for Canadian canola in China. China is actively importing cheaper canola from Australia and rapeseed from Ukraine.