Lower crop forecasts in Australia and Ukraine support rapeseed prices

Frosts and lack of precipitation in April and May in Ukraine, as well as dry weather at the beginning of sowing in Australia, remain the main factors supporting prices for rapeseed and canola. Cold weather and rains in Canada also delayed sowing, although they increased soil moisture reserves.

Experts from the PUSK Cooperative Analytical Center reported that “up to 30-40% of rapeseed crops were damaged in some farms in Dnipropetrovska, Kharkivska and Kirovohradska oblasts, although there is no official information on this yet. As a result, the rapeseed harvest in the new season will decrease to 4.1 mln tonnes (4.7 mln tonnes in 2023/24 MY), so the prices will be much higher than last year”.

Traders are contracting new crop rapeseed at 430-440 USD/t with delivery to the Black Sea ports, but the sales pace is very low. For deliveries to Germany in August-September, they offer 450-465 €/t, but most buyers are ready to contract rapeseed only for November amid active sales by local farmers.

the August futures for rapeseed on the MATIF exchange in Paris on Monday rose to the highest since July 2023 level 485 €/t, but yesterday fell 1.2% to 479,25 €/t or 520 $/t (+0.4% for the week, +3.9% for the month).

Dry weather in the South and West of Australia may reduce the yield of canola, while heavy rains in the East will help increase wheat production. Canola has been sown in the country for several weeks now, but while weather conditions in Queensland and most of New South Wales are favorable for sowing, in Western and South Australia the soil is very dry, so farmers may reduce the area under canola in favor of winter wheat and barley. The state of Western Australia produces more than 50% of the Australian canola crop. According to forecasts, compared to last year, the country’s canola sowing areas will decrease by 6% to 3.1 million hectares, and the harvest will decrease by 5% to 5.4 million tons.

On the Winnipeg Stock Exchange, July canola futures this week rose 1.4% to 665 CAD/t or $487/t (+3.9% for the month), and November futures – by 1.6% to 685 CAD/t or $502/t (+4.6% for the month) amid delayed sowing and rising soybean prices in Chicago.

According to the Canadian Grain Commission, in 2023/24 MY (as of May 19), Canada exported 5.1 mln tonnes of canola, which is 26% lower than last year. It is expected that the canola harvest in the country will exceed last year’s, so if farmers complete sowing in the optimal time, the sale of stocks will intensify, including deliveries to the EU.

Oil prices are falling as threats from Iran diminish. This is likely to continue until the election of a new Iranian president on June 28. July futures for Brent crude oil fell by 1.4% to $82.8 per barrel during the week (-3.9% for the month), and the allocation of 1 million barrels of gasoline from the reserves for Independence Day announced by the US Presidential Administration to increase domestic supply will further reduce demand for oil and, accordingly, biodiesel.

Tags: Australia, Ukraine, prices, rapeseed