Surge in Ukrainian Rapeseed Prices
Despite the impending mass harvest, rapeseed prices in Ukraine are on the rise. Traders who have pre-contracted substantial volumes of rapeseed are actively increasing purchase prices at ports to accumulate maximum lots. This is due to the anticipated decrease in harvest volumes, which will significantly heighten competition with processors.
Increased Purchase Prices at Ports
Over the past week, export purchase prices for rapeseed in the Black Sea ports have risen by $15-20 per ton, reaching $430-450 per ton or UAH 19,000-20,400 per ton. These prices align with forward price levels, stimulating producers to sell more actively. Demand prices for rapeseed with delivery to the Czech Republic and Romania stand at 430-440 €/ton, and to Germany at 440-450 €/ton, with deliveries expected no earlier than September.
Forward Contracts and Domestic Market Pressure
According to Spike Brokers experts, 600-800 thousand tons of rapeseed have been sold under forward contracts in Ukraine, with deliveries scheduled from July to January across all export directions. Domestic processors, unable to compete with exporters, are expected to face a price decrease in July due to increased supply.
Global Market Dynamics and Canola Prices
Favorable weather in Canada has improved the outlook for the canola crop, exerting downward pressure on prices. July canola futures on the Winnipeg exchange fell by 0.8% to 600 CAD/ton or $440/ton (-12.2% for the month), while November futures decreased by 1% to 618 CAD/ton or $453/ton (-12.1%). As of June 16, Canada has exported 5.8 million tons of canola this season, down 21% from last year’s pace, causing unsold stocks to weigh on prices as harvest approaches.
European Market Trends
On the Paris MATIF, August rapeseed futures rose by 1% during the week to €462/ton or $496/ton (-6.2% for the month). This increase was supported by forecasts of a lower EU harvest but remained under pressure from falling canola prices. The MARS agency’s June report revised the 2024/25 EU rapeseed yield forecast down from 3.21 to 3.16 tons per hectare, compared to May estimates, while the average 5-year yield is 3.17 tons per hectare. Adverse weather conditions in Germany and France have further worsened the harvest outlook.
Processing and Import Challenges
According to FEDIOL, the EU’s rapeseed processing in May reached 1.576 million tons, 8.5% above the 5-year average. However, processing is expected to decrease in June due to regulatory maintenance at oil factories. Despite this, the EU and the UK are projected to process over 26 million tons of rapeseed in the 2023/24 season.
To compensate for the shortfall in rapeseed meal supplies from Russia and Belarus, the EU will need to import an additional 1 million tons of rapeseed. In the 2023/24 marketing year, the EU imported 316,000 tons from Russia and 254,500 tons from Belarus, accounting for 40% and 32.5% of all imports, respectively. Imports from Ukraine amounted to 161,300 tons, or 20% of the total.
The rising rapeseed prices in Ukraine, contrasted with falling global canola prices, underscore the complex dynamics of the agricultural markets. Stakeholders should closely monitor these trends, as regional weather conditions, export-import balances, and global market shifts will continue to play crucial roles in shaping the industry landscape.