UFOP: Sustained, elevated crop prices needed to endure EU’s ‘Farm to Fork’ strategy

Delayed harvests in Europe with average results that did not live up to expectations and dull harvest prospects in Canada suggesting global supply is set to remain tight are currently driving producer prices for rapeseed.

The strong increase in prices is fueled by the sluggish harvest in Western and Eastern Europe and continued dampened harvest prospects in Canada. Support also came from rising soybean prices over the same period. Paris listed new record levels for all futures traded on June 13 but, according to information published by Agrarmarkt Informations-Gesellschaft (mbH), maintained the familiar inverse that the stock-market price declined for more distant futures. By contrast, cash-market premiums tend to offset this development, at least until the end of the year.

Farmers’ inclination to sell was mostly limited to commodities tied up in contracts. In fact, deliveries were made directly to the oil mills in some cases. The decision in favor of storage clearly prevailed. Producers were not entirely satisfied with the results of the 2021 harvest, having hoped for higher yields and oil content. Only very occasionally did producers take advantage of recent significantly higher bids to sell new-crop lots or conclude contracts for the 2022 crop.

Spot commodity ex farm was valued above the level of 500 euros (USD$584) per metric ton in all regions. The price of 515 euros per ton reported in calendar week 32 was nearly 11 euros per ton higher than the price reported the previous week and up 43 percent on the price reported at the same time a year earlier. The range of prices between regions remained large with prices from 490 to 535 euros per ton free to warehouse. Prices of 422 to 453 per ton were under discussion for the 2022 crop.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has stated that producers base their selling behavior on their experience in marketing last year’s harvest. They sold too much too early in 2020. The UFOP sees producer prices at a level necessary to compensate lower yields and higher spending on crop protection. The association has said that the marketing year shows the price trend that will be needed for all types of crops if arable farming loses productivity permanently as a result of the implementation of the EU Commission’s “Farm to Fork” strategy. If, despite all critical indications in current impact-assessment studies, the general suggestions for reduction are actually implemented, the introduction of effective “external protection” will be a compelling requirement. The association has pointed out that otherwise, imports from third countries will undermine the EU’s level of ambition.