Oilseeds market outlook

July 2021

The latest Oilseeds Agri-Outlook takes stock of the current situation and looks forward to what we might expect in the coming months, for supply availability, trade and demand. The volumes below are estimates at the time of writing.

Production

Despite a small reduction in the UK rapeseed planted area this season, a slight increase in production is expected on the year. Current estimations peg the UK rapeseed crop at 1.1-1.2Mt for the 2021 harvest.

Compared with last year, growing conditions have been better for most. This has helped increase the yield potential of domestic crops. At the beginning of July, 59% of the crop was rated “good-excellent”. Regional differences have been reported though. With Yorkshire & the Humber reporting its lowest incidences of Cabbage Stem Flea Beetle (CSFB) since the neonicotinoid ban, 76% of rapeseed crops were “good-excellent”. Conversely, more challenges were see in the South East and Eastern regions and by July, 30% and 20% (respectively) in these areas were of questionable viability.

Trade

The UK will once again be a net importer of rapeseed in the 21/22 season. Given similar demand levels expected for the UK over the next 12 months, the UK import requirement may be on similar levels to the 20/21 year. However, the global situation it currently tight for rapeseed, which will likely support prices.

This tightness is reported in some of the key import origins for UK rapeseed. French production is pegged down this season, following a reduction in area. However, a slight uptick in area and production in Germany is helping to balance the European situation a little more.

The current Ukrainian harvest is reporting improving yields, going someway to offset the area reduction this year. For the past two seasons, Ukraine has been the biggest import origin for UK destined rapeseed, accounting for 30-40% of total UK rapeseed imports. If yields continue to improve and ease production concerns, domestic prices may feel some pressure as a result.

However, the tightness theme continues across the Atlantic. Continued drought conditions in Canada are severely affecting the viability of the Canadian canola crop. As a result, prices are being driven to multi-year highs, and the size of Canadian export capacity is becoming an increasing concern.

With soyabean pricing providing a basis for the entire oilseed complex, continued support for soy is feeding through to rapeseed pricing. With dryness worries over both North and South America and continuing Chinese demand, the bullish tone for the whole oilseed complex could provide some longer term price support.

Demand

Domestic crush demand is estimated at similar levels as the previous year. Across the EU, demand had seen an increase over recent months; the tightness in the market improving crush margins. However, with a slight easing of this tightness forecast moving forward, there is potential for margins to reduce slightly, which could marginally dampen demand.

 

Any increase in the UK demand (while restricted by capacity to a degree) in the face of increasing margins could well be tempered by strong rapeseed prices.


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