Scarcity of supply drives rapeseed price rally in Germany

Image: UFOP

Rapeseed prices in Germany surged considerably over the past two weeks in the wake of very firm forward prices in Paris. MATIF (Euronext Commodities) prices exceeding 415 euros per metric ton led to the highest rapeseed prices since January 2020 in the German spot market the week of Nov. 16-22.

According to research conducted by Agrarmarkt Informations-Gesellschaft (mbH), bids for rapeseed amounted to 370 to 400 euros per ton ex farm in the week of Nov. 16-22. This was up on average 9 euros per ton on the year and as much as 25 euros per ton compared to two years earlier. In some cases, the mark of 406 euros per ton was reached in drop shipping.

The higher price levels induced many producers to sell stocks in the past two weeks. As a result, stocks were largely cleared in some regions with only remaining quantities left in storage. Since contract business was also brisk with comparatively high prices, there have already been sales of rapeseed from the 2021 crop. Sales activities were also fueled by memories of the price slide that started in January 2020. At the time, rapeseed plunged 16 percent within two months. Many producers wanted to forestall this potential development by marketing their rapeseed early enough.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) sees this development of prices as a glimmer of light. Considering the fact that the situation in arable farming is fundamentally challenging due to low producer prices, weather-related declines in harvest volumes and increasing regulatory requirements, the essential question is whether the market will ever be able to fill the gap. The association has called on politicians to respond as promptly as possible. UFOP has said that anyone who believes that digitization alone will solve this basic problem is in denial of the reality of international competition.

According to UFOP, the German government's agricultural strategy lacks an adequate approach to generating higher earnings through increased diversification. But only then will arable farming, enhanced to include pulse production, be an economic prospect―in line with the economic pillar of sustainability.

For years, producer prices have remained below a level that would allow farmers to make the investments that would be required to develop their farm businesses further.