Markets still pressured but possible positive outlook for rapeseed

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It doesn’t appear we are at the bottom with grain prices. The latest AHDB Grain Marketing Report shows UK feed wheat futures (May-24) at £162.60/t, losing over £3.00/t since the 15th February. New crop futures (Nov-24) also fell by £3.00/t over the same period at £181.00/t.

There appears little let up in the pressure from cheap Black Sea exports and improving weather in Argentina and Brazil. Beneficial rains in Argentina haven’t rectified compromised maize crops but it has stopped further deterioration. Good weather in Brazil means maize plantings have progressed well. By the middle of last month, Conab – Brazil’s national supply companydeclared that the Safrinha maize crop was 31.5% planted, compared to 20.4% at the same point the previous season.

Paris rapeseed futures (May-24) also closed slightly down at €422.25/t. Rapeseed was pressured by Chicago soyabeans, which were down due to demand worries for soyabeans, the ongoing harvest in Brazil and expected rainfall in Argentina, which could boost soyabean output.

Rapeseed price pressure slowing

The better weather means good progress with South American soyabean crop maturity and harvests. Brazil’s soyabean crop is now 29.4% harvested (to 17 Feb), ahead of the same point last year when this was 23%. A record continental crop is set to come to the market.

Soyabeans account for 74% of global major oilseeds (sunseed, soyabean & rapeseed) production. Therefore, the price of this commodity is important for where rapeseed prices are going to go.

However, over February so far there has been a divergence in the pricing of these two commodities. Rapeseed prices have tracked sideways, while soyabeans have been pressured by the South American harvests commencing, and because of an expected higher US area and stocks.

As we moved into 2024 rapeseed futures went from trading at a discount to soyabeans futures to a premium. Over the past six weeks, this premium has grown.

Pressure on rapeseed prices is slowing, and for the most part prices have tracked sideways. On 2nd February domestic delivered rapeseed prices (into Erith, spot) were quoted at £358.50/t. On Friday 16th February, they were quoted at £356.50/t, only marginally down despite soyabean markets feeling sustained pressure.

This is due to provisional estimates for a reduced rapeseed area in the EU for harvest 2024. In Stratégie Grains latest oilseed report, EU-27 rapeseed production is estimated to drop by 7% year-on-year to 18.4 Mt, reflecting the reduction in area. The reduction in area is mainly from Eastern Europe. The latest report cites that this is likely to result in strong imports for 2023/24 from Australia and Ukraine.

From this reduced supply from Europe rapeseed could continue to command a premium over soyabeans. However, plantings data on the Canadian Prairies and of the Australian crop to come. Both are important for global rapeseed production. Also worth noting is the South Pacific could experience a La Niña weather event later in 2024, which could boost global rapeseed supplies going into 2025.

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