UFOP: Forward oilseed prices on a ‘healthy upward trend’

Image: UFOP

Prices for both rapeseed and soybeans have been flying high for several months. Rapeseed recently closed at a record level.

Paris rapeseed futures have rallied significantly since the beginning of 2021. On April 22, they reached a record high at 595 euros per metric ton. They have maintained this level since then. The reason for latest sharp price surge was the cold snap that gripped France. According to Terres Inovia, the southwest and northeast regions of France, and Normandy, were affected most severely. In these areas, around 10 percent of the land planted to rapeseed (approximately 90,000 hectares) was broken up due to winterkill losses. Considering the progress of plant growth, yields are also set to fall short of expectations in some locations due to frost. Tight EU rapeseed supply in 2020-’21 has driven prices since the beginning of the year. Imports from the Baltic countries and Ukraine slowed due to declining stocks. Shipments from Canada also dwindled as a result of a steady decrease in supply. In the first half of the trading year, Canada exported rapeseed at a record pace. This led to a sharp reduction in the country’s scarce stocks. Canada will presumably start the new season with extremely low beginning stocks.

Soybean prices in Chicago have also been moving in only one direction—upward—for several months. The focus in the soybean market has been on growing and harvesting conditions in South America and the U.S., brisk demand and the surprisingly sharply drop in stocks. In Brazil, drought initially delayed plantings, whereas later heavy rains hampered harvest operations. In Argentina, the harvest could be slightly lower, because the drought that hit the country presumably curtailed yields. Also, the market had to rely on U.S. soybeans for longer than usual due to the harvest delay in Brazil. As a consequence, U.S. warehouses are emptier than expected. U.S. stocks were reduced faster than initially forecast anyway due to unexpectedly buoyant demand from China. Consequently, unfavorable supply forecasts for the coming crop year are fueling concerns about supply bottlenecks and, as a result, prices.