W50 Canola/Rapeseed Update: USDA Raises Global Rapeseed Production Forecast for 2023/24 MY with Focus on Canada and Australia

USDA Raises Global Rapeseed Production Forecast for 2023/24 MY

In its Dec-23 report, the United States Department of Agriculture (USDA) raised the global rapeseed production forecast for the 2023/24 marketing year (MY) by 1.4 million metric tons (mmt) to 88.82 mmt. Notably, Canada's production estimate increased by 1 mmt to 18.8 mmt, and Australia's by 0.4 mmt to 5.5 mmt. Consequently, Australia's rapeseed export forecast was adjusted upward by 0.2 mmt to 4.4 mmt, Canada's by 0.2 mmt to 7.7 mmt, and Ukraine's export forecast was reduced by 0.2 mmt to 3.45 mmt.

Global Rapeseed Sales Slump in 2023/24, Offset by Increased Oilseed Shipments from Key Exporters

In the 2023/24 MY, sluggish rapeseed sales by farmers in key exporting countries, such as Australia, Canada, and European nations, have led to a global decline in oilseed exports. Projections suggest that global rapeseed exports may reach 18.1 mmt, slightly lower than the previous season's 18.44 mmt. However, total oilseed shipments from top exporters like Australia, Canada, and Ukraine from Jul-23 to Oct-23 were 0.7 mmt higher than the same period last year, with Australia and Canada contributing to the increase and offsetting reductions in oilseed exports from other regions.

Surging Canola Demand in North America Spurs Expansion Plans

Demand for canola in North America is rising, fueled by increased requests from both the biofuel and food sectors. The US Canola Association anticipates that the planned expansion of canola acreage and processing capacity in North America will meet the growing demand. The association highlighted the versatility of rapeseed oil as an excellent feedstock for biodiesel, renewable diesel, and clean aviation fuel. Despite the increasing demand, representatives of the association believe that prices for rapeseed and rapeseed oil can be controlled, given the simultaneous growth in supply and production volumes.

Surging Demand and Exports Propel Ukrainian Rapeseed Prices and Volumes

The demand for Ukrainian rapeseed is on the rise, driven by increased exports through Black Sea ports and efforts to ease border restrictions with Poland. Consequently, rapeseed prices surged to USD 365 to 375 per metric ton (mt) with delivery to Black Sea ports, while demand prices for exports to the Czech Republic and Germany have risen to USD 410 to 420/mt. Despite a reduction in Nov-23 rapeseed exports compared to Oct-23, totaling 337 thousand mt, Ukraine has exported nearly 2.4 mmt in 2023/24 MY, with a total harvest of 4 mmt. The country plans to process 700 to 800 thousand mt domestically and export the remaining 3.3 to 3.5 mmt. Additionally, processed product exports have seen an uptick, with 340 thousand mt of rapeseed oil exported in the first five months of the 2023/24 MY, including 49 thousand mt in Nov-23, equivalent to 700 thousand mt of rapeseed.

Ukraine's Rapeseed Reserves Reach 750,000 mt

As of December 1, Ukraine has 750 thousand mt of rapeseed stocks, with an additional 100 thousand mt expected to be processed domestically. With ongoing exports, reserves are anticipated to reach 500 thousand mt by Jan-24, enabling Ukraine to sustain oil trade until early Mar-23. Ukraine holds ample rapeseed reserves following a robust harvest, and stable oil prices have made it profitable for farmers to sell to Ukrainian processors. The recent easing of the Ukrainian-Polish border blockade is seen as positive news for the rapeseed market, allowing for increased exports to Germany.