Favorable Sowing Conditions in Canada
Despite the cool and rainy weather, Canadian farmers have nearly completed canola sowing as of June 10. This has led to a sharp drop in canola prices on the exchange, primarily due to large stocks of last year’s unsold harvest and optimistic prospects for the new crop.
Impact on Futures Prices
On the Winnipeg Exchange, July canola futures fell by 3.6% to 605 CAD/ton (440 USD/ton), showing a 10% drop for the month to a three-month low. November futures also fell by 2.5% to 624.6 CAD/ton (455 USD/ton), marking a 9% drop for the month. Funds have started shifting their positions towards the November contract as demand for rapeseed decreases amid the approaching harvest in the EU and falling prices for rapeseed and soybean oil.
Soybean Planting in the US
Soybean planting in the US is nearly complete, with crop conditions rated at 70% good to excellent compared to 54% a year ago. This improvement has caused November soybean futures in Chicago to drop by 1.8%, adding additional pressure on canola prices.
European Market Trends
On the MATIF exchange in Paris, August rapeseed futures fell by 2.4% to 457 €/ton (490 USD/ton), reflecting a 2.6% decline for the week and a 4.8% decline for the month, following the trend in canola prices.
Since the beginning of the 2023/24 marketing year, as of June 9, the EU has imported 5.2 million tons of rapeseed, 27% less than the corresponding figure for the 2022/23 marketing year. However, there has been a slight increase in supplies from Canada.
Ukrainian Market Dynamics
In Ukraine, the harvest of early grains has started, with rapeseed harvesting set to begin at the end of June. Yield forecasts remain significantly lower than last year’s. Experts from MARS, in their June report, forecast the rapeseed harvest in Ukraine at nearly 4 million tons, 12% less than last year but 16% higher compared to the 5-year average. The area is estimated at 1.5 million hectares, which is 16% more than the 5-year average.
Export Prices and Farmer Responses
Export demand prices for new crop rapeseed have decreased by 10-15 USD/ton to 400-420 USD/ton (17,500-18,500 UAH/ton) with delivery to Black Sea ports. However, higher forward prices from a few weeks ago may still hold back sales from farmers. Demand prices for rapeseed with delivery to EU countries are offered at 460-465 €/ton, but with delivery in October-November, so Ukrainian farmers are in no hurry to contract volumes.
Weather Impact on Future Prices
Rains in major canola-growing regions in Canada and Australia are improving crop prospects and are expected to significantly pressure prices in the coming weeks.
The completion of canola sowing in Canada under favorable conditions, along with improving weather in major growing regions, is expected to keep pressure on rapeseed prices. Farmers and traders should monitor these developments closely to navigate the market effectively.