European RSO spot prices hike on crushing suspensions

European rapeseed oil (RSO) spot prices hit a multi-month high last week, as the suspension of rapeseed crushing at plants in Germany and France curbed supplies.

The Argus prompt fob Dutch mill RSO price rose by €49/t last week to €1,299/t ($1,522/t) on 20 August, its highest since 10 June. Average prompt prices last week were higher by €63/t than the previous week.

The price hike was spurred by a number of production issues. French biodiesel producer Groupe Avril said that there was a fire in the crushing unit at its Grand Couronne unit on 16 August. It did not halt biodiesel production, Avril said. Grand Couronne processes 1mn t/yr of rapeseed for Avril, to be used in a variety of applications including foodstuffs and on-site production of rapeseed oil methyl ester (RME).

In Germany, agricultural conglomerate Cargill temporarily halted rapeseed crushing at its Salzgitter plant because of capacity issues.

“Silos were full and we needed to empty and clean them before we could continue”, Cargill said on 20 August. “We expect there may be further instances over the month of August where we will need to reduce throughput. But they will be sporadic.”

Also in Germany, French commodities company Louis Dreyfus (LDC) last week halted crushing operations at its Wittenberg plant in order to resolve quality issues identified on August 16.

“Impacted operations will not resume until we can ensure the quality issue is totally resolved, and cannot therefore be specific on the timeline at this point”, LDC told Argus on 20 August. Biodiesel and refining operations on site are unaffected and remained operational. The Wittenberg plant’s crushing capacity is 1,750 t/d of oilseeds.

Demand for RSO from European biodiesel producers has been strong in recent weeks as production margins for RME significantly improved. The spread between prompt fob Dutch mill RSO and the Argus benchmark biodiesel grade RME has averaged $197/t in August so far, up from $160/t in July and from $132/t in the same period a year earlier.

Demand could weaken in the coming weeks. Some European biodiesel producers have begun cutting output because of reduced deliveries of alcoholates following a fire at German chemicals company BASF’s Ludwigshafen plant.

Argus Media

Tags: European RSO, spot prices, crushing suspensions