Сollapse in oil prices led to a sharp reversal in rapeseed and canola prices

The news that Iran and Israel are ceasing fire and Trump’s call not to raise oil prices led to a sharp drop in August oil futures yesterday by 7.7% to $71.5/barrel, which caused a significant decrease in canola and rapeseed prices.

Iran’s response to the US attack on the country’s nuclear facilities was less serious than expected, as 14 Iranian missiles sent to a US base in Qatar were intercepted, and President Trump announced that Israel and Iran would cease fire from June 24. Recall that the Iranian leader was dissatisfied with the support of his ally Russia, and after the visit of the Iranian Foreign Minister to Russia and the meeting with Putin, he probably realized that there would be no such support at all.

July canola futures fell 3.2% yesterday to 721 CAD/t or $525.6/t, completely losing last week’s gains (0% month-on-month), while November futures fell 2.6% to 725 CAD/t (+4% month-on-month).

Cool, rainy weather is forecast for Canada this week, which will continue to improve canola crop conditions and put pressure on prices.

August rapeseed futures on the Paris stock exchange fell by 1.3% yesterday to €499/t or $579/t (+2% for the week, +2% for the month).

The start of the rapeseed harvest next week will sharply increase the pressure on prices in the EU, where there is low demand for biofuels, especially after the significant drop in oil prices, as diesel prices will fall again.

In Ukraine, last week, forward prices for rapeseed with delivery to Black Sea ports increased by $10-20/t to $530-550/t or UAH 25,000-25,500/t following the increase in prices on the Paris stock exchange.

Due to cool weather and low rainfall, rapeseed ripening in Ukraine is delayed, so harvesting will start later than in the EU. For this reason, data on the yield and quality of the new crop in the EU will put pressure on prices at the beginning of the season, while data from Ukraine will have a minor impact on exchange prices in Paris.

Some processors in the EU have already purchased the required volumes of rapeseed by September-October, so significant demand is not expected at the beginning of the season, and the fall in prices for oil and vegetable oils will further increase the pressure on quotes.

Tags: prices, rapeseed