Rapeseed prices on the Paris stock exchange increased by 2.7% amid uncertainty with the biofuel market

Despite the decline in oil prices and canola, the price of rapeseed on the stock exchange in Paris yesterday rose by 2.7% to the highest since July level of 475,25 €/t or 528 $/t amid the intentions of the EU government to reduce the number of CO2 certificates, which will affect the biofuel markets, as well as imports of soybeans and palm oil.

Last week, oil prices rose and supported the quotes of vegetable oils, but on Monday they fell by 1% amid a decrease in the likelihood of war between Israel and Lebanon or Iran. Israel continues to destroy Hezbollah’s warehouses with missiles and terrorists, and the Iranian President announced a review of relations with Western countries.

On Friday, the German Ministry of Agriculture proposed to limit the validity of a large number of surplus CO2 certificates for 2023 and 2024 until the end of 2024, although previously they could be used for another 2 years. The excess of such certificates in the 4th quarter of 2024 will create uncertainty in the biofuel markets, which will significantly affect the rapeseed market, which depends on subsidies for biodiesel plants.

The market is also expecting the new EU Deforestation Regulation (EUDR) to come into force on 30.12.2024, which requires companies supplying cocoa, coffee, palm oil, soy, cattle, rubber and timber to guarantee that their products are not deforested and are sourced legally. Failure to comply with these requirements may result in fines (40% of their turnover in the EU), product bans, reputational damage, and supply chain disruptions. Traders must conduct a comprehensive verification of the data provided by farmers on the land where soybeans and palm trees are grown and enter it into the EU information system with the geolocation of the fields where the products were grown. If traders do not have time to collect the necessary information, the supply of palm oil and soybeans may stop in early 2024.

In the prairies of Canada, dry and warm weather contributes to the harvesting of canola, so the November futures on the stock exchange in Winnipeg after last week’s growth of 8% yesterday fell to 587 CAD/t or 435 $/t, which corresponds to the level of last month.

In Australia, canola will begin to be harvested in 6 weeks, but traders have already started to buy it for deliveries to the EU.

In Ukraine, the number of traders buying rapeseed in the port is decreasing, and the processors have switched to other oilseeds, so farmers should take advantage of high prices to sell rapeseed before the turbulence in the EU biofuel market and increase in canola supplies from Canada and Australia.

Tags: prices, Canada, rapeseed, Ukraine, EU