W40: Canola & Rapeseed Update
In W40 in the canola landscape, Nov-23 futures on the Paris Stock Exchange rose by USD 1.59 per metric ton (mt) to USD 477.33/mt on October 3. The trend certainly remains sustained with the recent drop in the Eurodollar parity below USD 1.05, favorable to the competitiveness of the European Union (EU) origins in the face of import seeds. Still, the clear consolidation of crude oil prices is pulling the entire complex in the opposite direction. On Thursday, October 5, rapeseed prices dropped by USD 5.58/mt to USD 461.12/mt, mainly in reaction to the fall in crude oil prices, which had declined by more than 5% due to a rise in gasoline stocks in the United States (US).
Rapeseed prices in the EU significantly declined in Sept-23 despite a poor harvest. This is mainly due to cheap imports from Ukraine, which created a price difference of more than USD 106.31/mt. As of September 14, EU countries imported nearly 826 thousand mt of rapeseed, with Ukraine being the main supplier, contributing over 422 thousand mt, accounting for more than half of the total imports. In Rouen, France's primary trading center, rapeseed is priced at USD 500.72/mt, while Australian rapeseed is at USD 557.06/mt. Meanwhile, grain prices in Canada were even higher, with export prices around USD 609.15/mt.
Strategie Grains analysts have raised the EU's rapeseed production estimate in the 2023/24 marketing year (MY) by 600 thousand mt, bringing the total to 19.5 million metric tons (mmt). This increase is attributed to better-than-expected harvests in several EU countries, including Romania, the Baltic states, Germany, Spain, and Italy, aligning with the previous season's results.
Similarly, Ukraine's Ministry of Agrarian Policy and Food has revised its forecast for grain and oilseed production in 2023 to 79.1 mmt due to favorable weather. Oilseed production is projected at 21.6 mmt, with a record-breaking rapeseed harvest of 4 mmt. Nearly 3 million hectares (ha) of winter crops had been sown by the beginning of Oct-23, with 1.08 million ha dedicated to rapeseed. Favorable weather conditions have contributed to these forecasts.
Russia will implement restrictions on the import of seed material for nine crops from countries it considers unfriendly. The affected crops include wheat, corn, barley, rye, potatoes, soybeans, canola, sunflower, and sugar beets, covering a range of grains, oilseeds, vegetables, and industrial crops. These restrictions are expected to be in effect until the end of 2023. However, countries within the Eurasian Economic Union (EAEU) are exempt from this measure due to their friendly relations, high-quality seed material, sufficient volume, and geographical proximity to Russia.
Similarly, Belarus has extended its ban on the export of grain crops, rapeseed, and sunflowers for six months. Exporters must obtain one-time licenses from the Ministry of Antimonopoly Regulation and Trade, with approval from regional executive committees and the Minsk City Executive Committee.