Market Reactions to Weather and Harvest Delays
The recent sharp decline in August canola futures on the Paris Stock Exchange has taken traders by surprise. This drop comes despite the ongoing canola harvest and the delay in France and Germany due to persistent rains, which have caused crop losses and reduced quality.
Futures and Prices Overview
Over the last three sessions, August rapeseed futures in Paris fell by 4.5% to €472.5/t ($513/t), showing a monthly increase of 2.1%. Meanwhile, November futures dropped by only 1.6% to €493.5/t ($536/t), up 5.3% for the month. This reflects a high demand level, suggesting that the decline in August futures is linked to increased supplies as the harvest progresses.
Impact on Canadian and Ukrainian Markets
On the Winnipeg exchange, November canola futures decreased by 0.6% to CAD 671/t ($486/t), following a significant 9.5% gain last week, even amid the prairie heat. Forecasts predict continued dry and hot weather in Canada next week, which is unfavorable for canola during its crop formation phase.
In Ukraine, purchase prices for rapeseed dropped by 500-700 UAH/t over two days to 22,800-23,000 UAH/t ($470-475/t) for delivery to Black Sea ports, down from last week’s 23,500-23,700 UAH/t. This price reduction has led farmers to decrease their sales.
Export and Demand Trends
Traders have already contracted over 1 million tons of new crop rapeseed and continue active purchases for export to the EU. The demand prices for rapeseed deliveries to the EU, particularly to the Czech Republic and Germany, in July-August remain at 465-470 €/t.
Stable Oil Prices
Oil prices remain stable, and the main factor supporting rape quotes next week will be the weather conditions in Canada.
The unexpected drop in canola futures underscores the volatility in agricultural markets influenced by weather patterns and harvest timings. Traders and farmers must stay vigilant and adaptable to these rapid changes to navigate the complexities of the global agricultural market.