W29: Canola & Rapeseed Update

In W29 in the canola landscape, on July 18, August rapeseed futures on the Paris stock exchange rose 1.6% to USD 535.6/metric tons (mt). This represents an increase of 3.2% week-on-week (WoW) and 1.7% month-on-month (MoM), driven by harvest delays due to rains and higher demand from the biodiesel industry. On July 19, rapeseed futures further increased by 5.4% to USD 552.78/mt, but they were 25.4% lower YoY. The surge in the market was caused by an attack on the port infrastructure in Odessa, which made investors think that Russia's withdrawal from grain agreements was serious. Russia's announcement that any ship heading to Ukraine would be considered a supplier of arms and ammunition and could be fired upon also contributed to the rise in futures.

Meanwhile, November canola futures on July 18, on the Winnipeg exchange increased by 0.5% to USD 632/mt, with a significant rise of 5.8% WoW and 16% MoM. The price surge was driven by expectations of little precipitation, particularly in Saskatchewan, leading to speculative price increases. Additionally, as of July 10, a significant portion of the canola crop in Saskatchewan and Alberta was reported to be in fair or good condition, which further supported the price hike. On July 19, Canadian canola continued to rise, reaching USD 636.41/mt, with a YoY increase of 0.7%.

According to the United States Department of Agriculture (USDA) July report, global rapeseed production for the 2023/24 season is forecast at 87.423 million metric tons (mmt). Key estimates include 20.3 mmt for canola production in Canada and 20.2 mmt in the European Union (EU). Germany's Association of Farm Cooperatives maintained their rapeseed crop estimate at 4.14 mmt, unchanged from before but down 3.3% YoY. Furthermore, Poland, Bulgaria, Hungary, Slovakia, and Romania are calling for the extension of the EU's ban on imports of Ukrainian wheat, maize, rapeseed, and sunflower seeds until the end of the year. Poland has even threatened to keep its borders closed if the European Commission does not agree to the extension.

The export of rapeseed from Ukraine is facing delays, with only 100 thousand mt supplied by the end of June out of the contracted 500 thousand mt for July and 700 thousand mt for August. The delays are due to low prices, which have made rapeseed less profitable, leading farmers to hold back on sales. Currently, conventional prices for non-GMO rapeseed are averaging around USD 406.42/mt to USD 375/mt. As a result, a severe shortage of rapeseed supply has emerged in the market, and traders' contracts are experiencing significant demand and activity. In the Cherkasy region, rainy weather is causing delays in harvesting early crops, particularly winter rapeseed. The prolonged presence of crops in the fields and windrows has led to significant grain shedding and a decline in quality. In Ternopil Oblast, the area of rapeseed crops has increased by 22% YoY to 95 thousand hectares (ha), with 85 thousand ha being winter rapeseed.

In Belarus, winter rapeseed for grain has been harvested from 27.1 thousand ha, resulting in a yield of 47.9 thousand mt. Lastly, the Russian Ministry of Agriculture has suggested implementing an export ban on rapeseed seeds from September 1, 2023, until February 29, 2024.