Rapeseed and canola prices fall for second day in a row amid declining demand for biofuels

The fall in oil prices has stopped, but has led to a sharp decline in demand for biofuels, as the situation in the Middle East remains uncertain and prices could either soar again or fall even lower.

August rapeseed futures on the Paris exchange fell 2.9% yesterday to €484.75/t or $563/t, down 4.2% in two days amid uncertainty over the EU biofuel market. It is worth noting that November futures are trading at a premium of +€10/t to August futures, indicating market expectations for further price increases.

Traders are closely watching the biodiesel market, which remains weak and lacks support from politicians. The draft presented last week by the federal government to implement the European Renewable Energy Directive (RED) envisages keeping the greenhouse gas emissions quota for 2030 at 25%, while industry associations have advocated for more ambitious targets and hoped for an increase to 40%.

July canola futures fell another 3.9% yesterday to 694 CAD/t or $505.5/t, losing 7.2% in two sessions, and November futures fell 2.7% to 706 CAD/t (-5.3% in two days) on forecasts of a decline in demand for biofuels due to falling oil prices.

In Ukraine, traders are still leaving their forward prices for rapeseed at $530-550/t or UAH 25,000-25,500/t with delivery to ports. Export demand for Ukrainian rapeseed will be quite significant, so traders are in no hurry to lower prices, trying to purchase maximum volumes at the beginning of the season.

US strikes on Iran’s nuclear facilities failed to destroy them, and President Trump stopped Israel from further strikes, so, according to experts, Iran could resume its nuclear weapons program in two to three months, and markets will remain under pressure from uncertainty with possible further military escalation and oil prices.