In Detail: Rapeseed
EU rapeseed prices have fallen a long way from their highs. In March Paris futures hit an all-time high of EUR521.50/tonne, well done whoever sold at that level because currently nearby November stands at EUR328.50/tonne, a decrease of 37 percent.
Lets have a look at the supply & demand fundamentals for rapeseed and veg oil:
VEGOIL SUPPLY & DEMAND
World demand for veg oil is expected to continue to rise, if not for human consumption then due to demand from the biofuel sector. Oil World thinks that both the US and Brazil will be cutting their soyoil exports due to the increased demand for biofuels and Argentina will not be able to fill in the gap. Oil World predicts that the US will export 1.03 million tonnes of soyoil this year versus 1.32 million tonnes last year. Last year the US consumed 2.4 million tonnes of vegetable oils for biofuels. This year Oil World expects that number to hit 3 million tonnes.
Oil World is penciling in 1.82 million tonnes of soyoil exports out of Brazil versus 2.38 million tonnes last year. Brazil used 900,000 tonnes of vegetable oil for biofuels last year and Oil World sees that number reaching 1.45 million tonnes this year. Last year Argentina exported 6.1 million tonnes of soyoil and this year Oil World thinks at best they will only be able to export 6.26 million tonnes. Last year the United States imported 3.25 million tonnes of vegetable oils. This year Oil World is putting that number at 3.53 million tonnes.
F O Licht says that world biodiesel production will hit 11.3 million tonnes this year versus 8.9 million tonnes in 2007. That is a 27% increase.
RAPESEED SUPPLY & DEMAND
On October 2nd, Stats Canada released their latest Canadian crop estimates and put the canola crop at a record 10.87 million tonnes. However, the trade was expecting an 11.2 million tonne number out of Stats Canada, and some feel that they may increase their crop estimate further before the end of the year. Agriculture and Agri-Food Canada (AAFC) is predicting that the Canadian canola crush will reach a record 4.3 million tonnes this year as new crush capacity comes on line.
AAFC is forecasting that the Canadian canola carryover will increase from 1.5 million tonnes last crop year to 1.9 million tonnes this year. Oil World sees it going to a “burdensome” 2.1 million tonnes.
Oil World is predicting that the European rapeseed crush will reach the 18.4million tonne mark this year. That would be up 16% from last year.
EU-27 rapeseed production this year is expected to be around 1 million tonnes higher than 2007/08 at 19.2mmt.
Australian 2008/09 rapeseed output is seen up around half a million tonnes to 1.6mmt, with production in India and China little changed.
Trade sources say that the Ukraine could have around 2.5 million tonnes of canola to export this year. APK Inform reports that the Ukraine exported 502,000 tonnes of rapeseed in August alone. That is 65% higher than last August and 3.8 times more than they exported in July. Since the beginning of this MY, Ukraine has exported 1.035 mln tonnes of rapeseed.
CONCLUSIONS
Extremely aggressive exports from Ukraine will likely slow up as we get to Christmas, as they have exported nearly half their crop already.
Still, whilst the EU crush is expected to increase, production has increased by even more, a situation that is mirrored also in Canada. Stocks are sizeable, if not even burdensome, to avoid a large carryover we need to see increased demand from either the vegoil or biodiesel sector.
In the current economic climate neither of these looks a likely possibility at the moment. Whilst producers might not like the current prices on offer, there is no price incentive (unlike wheat) to carry seed into next seasons crop. So, unless crude oil turns around dramtically, the outlook for rapeseed prices doesn't look promising.
Lets have a look at the supply & demand fundamentals for rapeseed and veg oil:
VEGOIL SUPPLY & DEMAND
World demand for veg oil is expected to continue to rise, if not for human consumption then due to demand from the biofuel sector. Oil World thinks that both the US and Brazil will be cutting their soyoil exports due to the increased demand for biofuels and Argentina will not be able to fill in the gap. Oil World predicts that the US will export 1.03 million tonnes of soyoil this year versus 1.32 million tonnes last year. Last year the US consumed 2.4 million tonnes of vegetable oils for biofuels. This year Oil World expects that number to hit 3 million tonnes.
Oil World is penciling in 1.82 million tonnes of soyoil exports out of Brazil versus 2.38 million tonnes last year. Brazil used 900,000 tonnes of vegetable oil for biofuels last year and Oil World sees that number reaching 1.45 million tonnes this year. Last year Argentina exported 6.1 million tonnes of soyoil and this year Oil World thinks at best they will only be able to export 6.26 million tonnes. Last year the United States imported 3.25 million tonnes of vegetable oils. This year Oil World is putting that number at 3.53 million tonnes.
F O Licht says that world biodiesel production will hit 11.3 million tonnes this year versus 8.9 million tonnes in 2007. That is a 27% increase.
RAPESEED SUPPLY & DEMAND
On October 2nd, Stats Canada released their latest Canadian crop estimates and put the canola crop at a record 10.87 million tonnes. However, the trade was expecting an 11.2 million tonne number out of Stats Canada, and some feel that they may increase their crop estimate further before the end of the year. Agriculture and Agri-Food Canada (AAFC) is predicting that the Canadian canola crush will reach a record 4.3 million tonnes this year as new crush capacity comes on line.
AAFC is forecasting that the Canadian canola carryover will increase from 1.5 million tonnes last crop year to 1.9 million tonnes this year. Oil World sees it going to a “burdensome” 2.1 million tonnes.
Oil World is predicting that the European rapeseed crush will reach the 18.4million tonne mark this year. That would be up 16% from last year.
EU-27 rapeseed production this year is expected to be around 1 million tonnes higher than 2007/08 at 19.2mmt.
Australian 2008/09 rapeseed output is seen up around half a million tonnes to 1.6mmt, with production in India and China little changed.
Trade sources say that the Ukraine could have around 2.5 million tonnes of canola to export this year. APK Inform reports that the Ukraine exported 502,000 tonnes of rapeseed in August alone. That is 65% higher than last August and 3.8 times more than they exported in July. Since the beginning of this MY, Ukraine has exported 1.035 mln tonnes of rapeseed.
CONCLUSIONS
Extremely aggressive exports from Ukraine will likely slow up as we get to Christmas, as they have exported nearly half their crop already.
Still, whilst the EU crush is expected to increase, production has increased by even more, a situation that is mirrored also in Canada. Stocks are sizeable, if not even burdensome, to avoid a large carryover we need to see increased demand from either the vegoil or biodiesel sector.
In the current economic climate neither of these looks a likely possibility at the moment. Whilst producers might not like the current prices on offer, there is no price incentive (unlike wheat) to carry seed into next seasons crop. So, unless crude oil turns around dramtically, the outlook for rapeseed prices doesn't look promising.
