Grain Market Daily

James Webster


James Webster, Senior Analyst, AHDB Market Intelligence, 02476 478844



Will rapeseed prices bounce back?

Since the end of April new-crop Paris oilseed rape futures have fallen considerably, from €371.25/t to €361.75 at yesterday’s close. UK delivered oilseed rape prices dropped by only £4.50/t, between 26 April and 10 May; new-crop rapeseed delivered into Erith reported at £320.00/t on 10 May.

Why have rapeseed markets fallen and where will they go next?Rapeseed Prices

Trade disputes and Ukraine area pushing prices lower

Ongoing trade disputes between US-China and Canada-China have added significant weight to the oilseed complex.

Both Canadian stocks of rapeseed and US stocks of soyabeans are forecast to grow significantly this season. Canadian planting prospects for 2019/20 rapeseed are only 1.6% down on the five year average despite the challenging outlook for the crop.

In the US, more weight is being added into the market sentiment for soyabeans by the latest escalation in trade tensions between China and the US.

Corn plantings in the US also add weight to the soyabean market, with the potential for growers to swicth into soyabeans. US corn plantings are currently 36 percentage points behind (2014-2018) average, at only 30 percent complete.

Finally Ukrainian production is also keeping markets pressured. Ukraine is forecast to produce a record oilseed rape crop in 2019/20, with crop conditions favourable at present.

EU production, oil markets and South America to offer support

While these factors above all point to a bearish sentiment, there are also some arguments for a lift in OSR prices.

EU crop production certainly looks like one of these arguments. Rapeseed production in the EU is expected by many to fall to its lowest level for some time. The EU Commission’s latest forecast from 25 April, pegs EU oilseed rape production at 19.2Mt, the lowest since 2008. The German farm cooperative DRV estimates the German rapeseed crop to be 17.1% smaller year-on-year, at 3.04Mt, a 200Kt cut on it's previous estimate (April 16 - 3.24Mt).

Rapeseed Production

Another potential factor that could outweigh the bearish outlook for oilseed markets is the slow progress of US soyabean plantings. Which are 20 percentage points behind average. This is something to keep an eye on over the coming weeks.

Rainfall in the northern producing regions of Argentina continues to hamper harvest progress. The Buenos Aires Grain Exchange highlighted that the above average rainfall forecast for parts of Argentina could result in area loss, supporting prices.

Finally, the oils market is also likely to offer potential support. While vegetable oil prices have been trending down of late, reduced oilseed imports from China will likely increase the nations need to import vegetable oil. This could tighten the market and support the oilseed complex.

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