No let up in the rapeseed oil prices.
Refined rapeseed oil prices have rallied sharply over the past week, to unprecedented record levels reflecting the extreme tightness in the old crop (through to July) months
and concerns over the lower new crop potential both in the EU, UK and now Canada. Rapeseed prices have reached record levels over the past week, as prices need to remain high to encourage seed imports from the likes of Australia and Canada, where prices have also rallied sharply in recent weeks due to ideas that production could fall this year. Additional support is still coming from continued strong demand.
We have seen some significant gains in the rapeseed oil market over the past few months, which has shocked many market players as prices have exceeded (by some margin) the high levels seen back in 2011 and 2009 and the highest I have seen in over 30 years in the industry. There has been lots of talk whether we are in the midst of the global “super-cycle” for the main oil commodities (a multi-year period of growth) but this seems premature unless there are further crop losses this year, but this is not expected in any market at the moment. However, unlike other crop forecasts were there are expectations that production will recover later this year but the supply and demand outlook for rapeseed is looking to remain tight well into 2022 but demand could ease if we see the expected recovery in sunflower and soy. One of the triggers to the recent gains has been the poor weather conditions across Eastern and Western Europe as conditions have been far from ideal with concerns that frost damage will hurt crop development and lead to a lower-than expected
crop in just a few months. Production has been struggling in recent years due to the ban on neonicotinoids which has increased damage from the cabbage stem beetle which has been devastating for farmers. It is still probably too early to predict the ultimate size of the EU and UK crop but the market is already aware of damage in France but there are reports
that this has been offset by better production on other countries. French production was recently estimated at 3.05 million tonnes, which now seems extremely optimistic, down from 3.25 million last year and a high of 5.27 million back in 2017. The EU commission has estimated EU-27 rapeseed at 5.16 million hectares, down from its previous forecast and compared to 5.17 million last year and the 5-year average of 5.77 million. Production is estimated at 16.45 million tonnes, down from initial estimates but compared to 16.34 million last year and the 5-year average of 17.56. Combined EU/UK crop is around
17.46 million tonnes.