Rape futures on Euronext fell another 2.9% to €441/t yesterday, losing 26% for the month
The sharp drop in rapeseed prices on the Euronext exchange is already causing panic among traders who do not understand at what level the collapse of quotations will stop.
Amid a sharp drop in demand caused by lower prices for raw materials, vegetable oils and meal in the EU, May canola futures on Euronext fell another 2.9% to a 2-year low of 441 yesterday after falling 3.2% on Monday. €/t or $475/t, losing 26.4% for the month and 65.5% for the year.
Forecasts of a good rape harvest in the EU in 2023 put pressure on the market. Thus, Strategie Grains experts increased the forecast of rape production in the EU in 2023 from 19.5 to 19.6 million tons, although the lack of precipitation in Western Europe in February caused some concern. In March, abundant rains fell in the moisture-deficient regions, which replenished the moisture reserves and improved the condition of winter crops and the yield potential.
It’s worth noting that canola prices have been falling much more slowly, with May canola futures in Winnipeg yesterday down 1.2% to CAD729.5/t or $532.5/t, having lost 3% in two days, 13 .8% per month and 26% per year.
The Canadian canola market is supported by a winter rainfall deficit in Saskatchewan, the largest oilseed producing province, which could lead to a reduced crop in the new season.
Canola and canola oil prices in Europe remain under pressure from strong canola stocks, buoyant imports and forecasts of a good canola crop in Australia. In addition, the decrease in biofuel prices reduces the demand for rapeseed oil, which was used as a raw material for its production.
A significant drop in rapeseed prices was predicted for 2024-25 under the condition of an accelerated transition to the use of electric cars instead of vehicles with internal combustion engines, which would cause a reduction in demand for diesel and biodiesel. But the current situation may be the first signal for the market that high rapeseed prices should no longer be expected.
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