Pressure Builds on Rapeseed: Market Faces Biofuel Uncertainty and Geopolitical Strains

Rapeseed and canola markets are experiencing notable turbulence, underscored by a pronounced drop in futures prices for the second consecutive day. Weakening biofuel demand continues to overshadow the sector, as legislative direction in Europe remains lackluster and policy uncertainty clouds market sentiment. Recent proposals from the German government—the largest rapeseed consumer in the EU—have failed to boost confidence, as the 2030 renewable energy target remains far below what the industry argues is necessary for robust market support. Meanwhile, oil prices have stabilized but the unresolved geopolitical situation in the Middle East is still injecting risk into energy-linked commodities.

North American canola is also facing downward pressure, responding to both global biofuel policy inertia and slumping oil prices. Yet in Ukraine, forward rapeseed prices show resilience as exporters move early to secure supply on hopes of rising future demand. The intricate linkage between energy, policy, and geopolitical tensions means that even small disruptions could rapidly shift market dynamics. Traders must stay alert to volatility, as future policy adjustments or shifts in the Middle East could pivot the market sharply in a new direction.

📈 Rapeseed Prices Overview

Exchange/Location	Contract/Delivery Terms	Price (USD/tonne or EUR/kg)	Weekly Change	Market Sentiment
Paris (MATIF)	Aug ’25 Futures	USD 563/tonne	-2.9% (2-day -4.2%)	Bearish
Paris (MATIF)	Nov ’25 Futures	USD 574/tonne	Premium +USD 11/tonne vs. Aug	Cautiously Optimistic
ICE Canada	Jul ’25 Canola	USD 505.50/tonne	-3.9% (2-day -7.2%)	Bearish
ICE Canada	Nov ’25 Canola	USD 514.30/tonne	-2.7% (2-day -5.3%)	Bearish
Ukraine (Black Sea, FCA)	Forward Rapeseed	USD 530–550/tonne	Stable	Neutral/Firm (export demand)
Ukraine (Kyiv, FCA)	Spot, 42% min oil	EUR 0.54/kg	+5.9% (from 0.51)	Stable/Firm
Ukraine (Odesa, FCA)	Spot, 42% min oil	EUR 0.55/kg	+3.8% (from 0.53)	Stable/Firm
France (Paris, FOB)	Spot	EUR 0.54/kg	Unchanged	Neutral

🌍 Supply & Demand Dynamics

• Biofuel Demand Slump: EU and North American rapeseed/canola processing mills are running below capacity due to weak biofuel and feedstock demand.
• Policy Headwinds: The German RED draft maintains the greenhouse gas reduction quota at 25% through 2030, dampening hopes for increased biodiesel blending.
• Speculative Positions: Funds have increased short positions in futures amid the negative policy signals and risk-off sentiment in global oilseed markets.
• Export Focus: Ukrainian traders are actively engaging forward contracts, anticipating robust mid-season demand, especially if global energy or policy outlook improves.

📊 Market Fundamentals

• Crop Acreage: European rapeseed sowings were steady year-on-year, but Canadian canola area contracted marginally according to latest Statistics Canada data.
• Stocks: Global rapeseed/canola inventories are slightly above 5-year averages due to last year’s strong harvest, but outlooks remain finely balanced on weather developments and policy changes.

Country	2024 Production (Est. Mt)	2024/25 Stocks (Est. Mt)	Notes
EU	20.2	3.9	Steady plantings, slow crush rates
Canada	18.1	3.7	Potential for lower yields due to spring dryness
Ukraine	3.8	0.4	Early export focus
Australia	5.1	1.2	Exportable surplus

☁️ Weather Outlook

• Western Europe: Mild temperatures and sporadic rainfall have improved soil moisture, supporting yield prospects in France and Germany.
• Canada Prairies: Recent precipitation over dry zones may alleviate immediate stress, but continued monitoring is warranted, as extended dry spells could pressure yield potential.
• Ukraine & Black Sea: Showers have stabilized crop conditions ahead of harvest, but excessive rain risk remains in coming days, potentially complicating logistics.
• Australia: Early conditions favor planting, with adequate soil moisture, though El Niño risk may shape the outlook later in the season.

📆 Trading & Price Outlook

• Short-term caution: Weak biofuel demand and policy inertia argue for defensive positioning. Near-term rallies may face resistance unless crude oil prices rebound.
• Strategic watching: Maintain flexibility as Middle East tensions and potential policy shifts (especially in Germany or EU) may abruptly alter fundamentals.
• Exporters: Given early season firmness in Black Sea prices, consider advancing forward sales while monitoring weather and logistic risks.
• Importers: Time purchases to market dips or further weakness in oilseed complex; remain alert for sudden volatility tied to macro or weather events.

🗓 3-Day Regional Price Forecast

Exchange/Location	Forecast Range	Sentiment
Paris (MATIF) Aug ’25	USD 555–570/tonne	Sideways to softly lower
ICE Canada Jul ’25	USD 500–515/tonne	Sideways to lower
Ukraine FCA/FOB	USD 530–555/tonne	Stable/Firm
Kyiv/Odesa (FCA)	EUR 0.53–0.56/kg	Steady to firm

*Note: Forecasts assume no abrupt escalation in Middle East geopolitics or major weather shocks in key production areas.