W27: Canola & Rapeseed Update

In W27 in the canola landscape, global rapeseed prices on the stock exchange experienced a notable 5.5% increase. The price increase followed Stratégie Grains’ downward revision of the 2023 European Union (EU) rapeseed harvest by 600 thousand metric tons (mt) to 19.8 million mt (mmt). The downward adjustment can be attributed to dry conditions in the northern EU regions. Despite this reduction, it is still projected to surpass the 19.2 mmt harvest of 2022. Strategie Grains also raised the rapeseed imports forecast from Ukraine to the EU, considering the high processing profitability, particularly in Western European countries and the Baltic states. On Tuesday July 4 on the Paris stock exchange, August rapeseed futures rose by 2.4% to USD 501/mt, an increase of 5.5% over two sessions, 4% WoW, and 8.6% MoM. The substantial old-crop rapeseed and oil stocks in the EU are exerting upward pressure on the market, as most factories are supplied with raw materials for processing until Sep-23. Also on July 4 on the Winnipeg exchange, November canola futures increased by 3.8% in two sessions, reaching USD 555/mt, an increase of 2.2% WoW, and 16.8% MoM. The expansion of Canadian canola acreage and improved weather conditions are boosting production prospects. This is expected to lead to a sharp increase in Canadian canola supplies.

Ukraine began harvesting its new rapeseed crop, with initial forecasts indicating high oil crop yield expectations. However, official data reveals that the average rapeseed yield is still low, ranging from 1.2mt/hectare (ha) to 1.3mt/ha. Although yield indicators may stabilize in the future, it is unlikely that there will be a record harvest. As a result, rapeseed prices started to rise sharply and are expected to continue increasing both in Ukraine and globally. The analytical department of PUSK noted that indicative prices at small river ports in Ukraine increased from USD 370.04/mt to USD 386.86/mt in W27. With the recent low supply of Ukrainian rapeseed and the ongoing harvest, it is anticipated that prices at small ports may reach USD 398.08-403.68/mt in the coming weeks on significant risk transfer (SRT) conditions. Processors announced purchase rapeseed prices within a wide range, varying by region, with the lowest prices currently observed in Odesa. Global biodiesel prices are increasing, along with the overall rise in vegetable oil prices, which will contribute to the upward trend in rapeseed prices on exchanges. However, the implementation of rapeseed sales may face downward pressure during Jul-23 and early Aug-23 due to the ongoing harvest of the new crop.

Lastly, canola sowing was completed in the main producing regions of Rio Grande do Sul in Brazil in W27, with flowering beginning in the Santa Rosa and Ijuí regions. Favorable climatic conditions led to well-developed crops with a healthy plant population. According to Emater/RS, the estimated canola cultivation area in Rio Grande do Sul this season is 67.22 thousand ha, with an expected productivity of 1,632kg/ha. In the Ijuí region, canola crops are showing rapid growth, with robust basal leaves that are large and vibrant green in color. Approximately 94% of the plants are in the vegetative stage, while 6% reached the flowering stage. In the Santa Rosa region, 80% of canola crops are in vegetative development, 17% are in the flowering stage, and 3% are in the grain-filling phase.