The introduction of a fixed price for Russian oil by the G7 countries and Australia supported rapeseed quotations

The G7 countries and Australia have agreed to set a fixed price for Russian oil instead of introducing a floating rate, which will stabilize the market, minimize the burden on its participants and simplify compliance.

Such a price has not yet been determined, but it will be done in the near future, and in the future, if necessary, it will be regularly reviewed.

The January Brent oil futures reacted to this news by increasing by 2% to $96.6/barrel (+7% for the month), as the Russian Federation may reduce oil supplies after the introduction of price restrictions.

In addition, prices were supported by data on the reduction of oil reserves in the US and the news of China’s possible exit from the policy of a country with a zero level of Covid.

Rising oil prices, in turn, supported quotes for palm and canola oil, which are used in biodiesel production, as well as demand and prices for canola.

After Russia’s announcement of withdrawal from the grain agreement, February rapeseed futures on the Paris exchange rose by 5% to 671 €/t, but after the resumption of the grain corridor fell by 1.8% to 658.75 €/t or 647, $9/t (+3% for the month), which corresponds to the price level at the beginning of August. A 2% increase in oil prices kept the quote from falling sharply.

It is worth noting that the 5% increase in rapeseed quotations against the background of the news about the blocking of the grain corridor was mainly speculative, since Ukraine has already exported 80% of the planned 2022/23 MR volumes of rapeseed.

On the Winnipeg exchange early in the week, speculative January canola futures rose 4.7% to CAD 906.8/t, or $664/t, in line with the November contract, which closed last week at CAD 910/t . This means that traders do not expect canola prices to fall in the near future.

In Ukraine, rapeseed is bought for only $470-500/t with delivery to the Danube ports, since many wagons and cars have accumulated in the Black Sea ports waiting for the approach of ships, which the Russians deliberately delay by slowing down the inspection before entering the port.

Tags: prices, rapeseed