Sharp drop in August rapeseed futures indicates significant supply in the market

On Friday, August rapeseed futures on the Euronext Paris exchange fell by 5.5% to €515.75/t, completely erasing the growth of the last two weeks amid active sales of August contracts, which expire by the end of July. Traders and funds that do not plan to make real physical deliveries of the commodity are massively liquidating their long positions and switching to trading in November contracts, which on Friday fell by only 2.2% to €550.75/t or $628/t (+4.3% in two weeks) under the pressure of falling oil prices and increasing physical supply of the new crop.

Ukrainian farmers sharply increased the supply of rapeseed for delivery to the EU in August and September, which led to a decrease in prices on the physical market from 545-555 to 525-535 €/t for delivery to EU factories in September.

September Brent crude futures, after reaching a 2-month high of $102/barrel on Thursday, fell 3.7% to $97/barrel on Friday (+31% for the month) and continued to decline on Monday on expectations of talks between the US and Iran, which will increase pressure on rapeseed prices.

On the ICE exchange in Winnipeg, November canola futures fell just 1.3% to CAD 825/t or $585/t on Friday, adding 5.9% to two weeks of speculative oil price gains. The weather in Canada is generally favorable for canola planting, so the harvest forecast remains high.

A third heat wave will hit Europe this week, continuing to reduce the potential yield of soybeans and sunflowers, which will support processors’ demand for rapeseed.

Seaborne rapeseed exports from Ukraine have virtually stopped due to Russian attacks on ports and civilian vessels. Ukraine is expected to sharply reduce its rapeseed exports this season, so EU buyers will continue to actively purchase Ukrainian rapeseed across the western border, especially given forecasts of reduced supplies from Australia due to a reduced harvest caused by increased dry weather.

In the MY 2025/26, the European Union reduced imports of rapeseed and canola by 28% compared to the previous season, from 7.5 million tons to 5.4 million tons, in particular from Australia – by 41% to 2.1 million tons, Ukraine – by 38% to 1.6 million tons (due to a decrease in the harvest and the introduction of export duties and reorientation to internal processing), from Canada – by 26% to 870 thousand tons.