The Rapeseed Market
Whilst other agri commodities have underperformed so far during 2010, rapeseed has been a little shining star. The Nov 2010 Paris rapeseed future, currently EUR4.50 higher on the day at EUR338.25/tonne, has risen by almost 15% so far this year, the only major grain/oilseed to post any sort of advance at all:
What's behind the rise, and is it likely to continue?
Well, rapeseed is only a pretty small global crop of course. At 55-60 MMT it's less than a tenth of the size of world wheat production, less than a quarter of the world soybean crop and fourteen times smaller than corn.
That makes it more vulnerable to taking a hit if one of the major producers has a problem. And this year production is taking a hit in the world's two largest producers: Canada and China.
China will produce 13 MMT of rapeseed this year, according to the USDA. Just about everybody else outside of China thinks that production will be much less, possibly even below 10 MMT, and at the very most 11.5 MMT. See: China Rapeseed Output May Miss U.S. Estimate by 15%, Group Says
Consumption in China meanwhile will hit a record 15 MMT in 2010/11, according to the USDA.
The planting problems in Canada have already been well documented, and remember that they are the largest exporter of rapeseed in the world, typically accounting for around two thirds of all international trade. Whist the trade is concerned over what hasn't managed to get sown this year, it doesn't yet seem to have switched it's attention to the ill-health of much of what has got into the ground. Or, judging by the reports of desperate farmers sowing by plane, should that be onto the ground or into the water?
Closer to home, lower output is expected from Europe's top two producers of France and Germany, whilst flooding in Poland is seen causing the crop in what was Europe's third largest producer last year to also shrink. A small amount of harvesting has already taken place in Ukraine, where winterkill problems have also been widely documented.
Europe is expected to consume almost 24 MMT of rapeseed in 2010/11, but with production looking likely to come in at only 21 MMT or less, we'll be looking to import 3 MMT ourselves this year. That's 85% of the entire world's exports in 2009/10 outside of Canada.
Change On Year
Paris Nov Rapeseed +14.7%
London Nov Wheat -9.3%
Paris Nov Wheat -1.8%
Paris Nov Corn -0.1%
CBOT Dec Wheat -16.4%
CBOT Nov Soybeans -7.9%
CBOT Dec Corn -15.8%
What's behind the rise, and is it likely to continue?
Well, rapeseed is only a pretty small global crop of course. At 55-60 MMT it's less than a tenth of the size of world wheat production, less than a quarter of the world soybean crop and fourteen times smaller than corn.
That makes it more vulnerable to taking a hit if one of the major producers has a problem. And this year production is taking a hit in the world's two largest producers: Canada and China.
China will produce 13 MMT of rapeseed this year, according to the USDA. Just about everybody else outside of China thinks that production will be much less, possibly even below 10 MMT, and at the very most 11.5 MMT. See: China Rapeseed Output May Miss U.S. Estimate by 15%, Group Says
Consumption in China meanwhile will hit a record 15 MMT in 2010/11, according to the USDA.
The planting problems in Canada have already been well documented, and remember that they are the largest exporter of rapeseed in the world, typically accounting for around two thirds of all international trade. Whist the trade is concerned over what hasn't managed to get sown this year, it doesn't yet seem to have switched it's attention to the ill-health of much of what has got into the ground. Or, judging by the reports of desperate farmers sowing by plane, should that be onto the ground or into the water?
Closer to home, lower output is expected from Europe's top two producers of France and Germany, whilst flooding in Poland is seen causing the crop in what was Europe's third largest producer last year to also shrink. A small amount of harvesting has already taken place in Ukraine, where winterkill problems have also been widely documented.
Europe is expected to consume almost 24 MMT of rapeseed in 2010/11, but with production looking likely to come in at only 21 MMT or less, we'll be looking to import 3 MMT ourselves this year. That's 85% of the entire world's exports in 2009/10 outside of Canada.