Rapeseed values to remain strong for 2021/22? Grain Market Daily

Market commentary

• Old crop UK wheat futures (May-21) closed yesterday at £199.00/t, gaining £1.25/t on Monday’s close. New crop (Nov-21) closed at £166.00/t, up £0.50/t from Monday’s close.
• Global wheat gained following soyabeans and maize values supported by rains across the U.S. Great Plains improving winter wheat conditions.
• Chicago soyabeans (May-21) closed yesterday at $522.96/t, up by $2.11/t, supported by strong soyoil demand. President Biden’s green energy policy push is seemingly increasing the appetite for bio-diesels.

Rapeseed values to remain strong for 2021/22?

It’s been well reported that for the 2021/22 marketing year, the UK and the EU will be in a deficit for rapeseed. As such, imports from third countries will remain critical.

Preliminary forecasts from the latest Stratégie Grains oilseed report shows that, while EU-27 production is predicted to increase (17.1Mt in 2021/22, up from 16.3Mt in 2020/21), imports are still to remain high at 6.2Mt and ending stocks forecast to be tight.

The three main suppliers for OSR into the EU are Australia, Canada and Ukraine. So far this marketing year, they have accounted for 95% of EU imports.

What’s the current outlook from these origins for rapeseed?

With the EU expected to rely on imports from these three countries for 2021/22, planting intentions and growing conditions in the areas could have a greater impact on the domestic price. With a tight domestic supply, both the EU and UK will be pricing near import parity to detract exports. Any potential supply concerns or opportunities from import origins will play a greater bearing on domestic prices.

Australia

Australia’s canola area is expected to increase. The La Niña rains this season alleviated the on-going drought, replenishing soil moisture levels for most. It is these moisture levels that will be a key watch point as we move into mid-April and the key sowing window.

Currently, soil moisture remains good in New South Wales. However, there are still pockets in the southern part of Western Australia with low moisture levels.

Canada

Despite increased production, total supply for 2021/22 is forecast to tighten to 21.0Mt from lower carry-in stocks, as Thomma detailed a few weeks back. Exports are predicted to fall by 5%, to 10.4Mt.

Soil moisture in the Canadian prairies will be the focus when planting commences in May, particularly the main growing regions of Saskatchewan and Alberta.

Ukraine

Crops are starting to emerge from dormancy in Ukraine now, so the temperature is key. Any snaps of freezing weather risk adverse crop effects.

Currently, the mean surface temperatures remain above 0°C coupled with slight precipitation deficits in the west. With the majority of OSR grown in central western regions, this is less of a risk.

The latest UkrAgroConsult report shows that 2021/22 production is at 2.44Mt, a slight increase on February’s estimate of 2.41Mt. This is from an increased revision in the seeded and harvest area.

Conclusion

Conditions in Canada, Australia and Ukraine will be key watch points for prices going forwards. While there is still plenty of the growing season ahead, swings in forecast production numbers either way could pressure or support domestic prices. Aside from the wider oilseed complex, crude oil and foreign exchange will be other key parameters in formulating domestic ex-farm values too.

More clarity will be available as the season progresses, with Statistics Canada publishing their planting and planting intention figures on 27 April and ABARES’s next Australian crop report due early June.

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