Heat in Canada reduces rapeseed supply
In Winnipeg, Manitoba, Canada, the July contract reached a new record high at the equivalent of just less than 661 euros per metric ton on July 13. An exceptional increase had already been recorded in the days before, the limit-up price and the biggest possible gain in one trading day having been reached. In other words, rapeseed rose around 100 euros per ton in Canada in a single week.
The surge was driven by expectations of heat-related crop failures in Canada, the world’s largest exporter. Continued high temperatures and drought in the Canadian plains have severely affected the development of the rapeseed plants. This will limit the yield potential. In its most recent estimate, the USDA lowered its yield forecast to 22.4 decitonnes per hectare based on reports from Canada. This level is below the long-term average. As a consequence, the potential output is also reduced. The estimate was lowered 0.3 percent from the previous month to 20.2 million tons. The extremely scarce supply of Canadian rapeseed had led to a strong upsurge in prices already in the weeks before. However, such upsurge will hardly dampen demand. The EU alone will need 0.15 million additional tons of rapeseed from abroad because its own supply is inadequate.
Whereas Canada's stocks from 2019-’20 amounted to just over 3 million tons the previous year, the country’s storage facilities are virtually empty at 1.2 million tons prior to the 2021 harvest. Even if the harvest were to reach the estimated volume of just over 20 million tons, exceeding the previous year’s output by 1 million tons, total supply would slide to a level 740,000 tons below the previous year’s figure and 1.5 million tons below the five-year average. This situation will limit rapeseed supply on a global scale and stabilize producer prices at the current appealing level.