Oilseeds market outlook

January 2022

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

Both globally and domestically, oilseed rape prices (OSR) have been soaring all season. This is as a result of tight global and UK supply, given the weather and pest challenges the crop experienced in the 2020/21 season and prior.

Given the support in prices, there was a price incentive for UK growers to expand their area to OSR for harvest 2022. And indeed this has been seen. The UK rapeseed area is forecast up 17% on the year, at 359Kha.

Oilseeds production projections

However despite the increase, this was from a very low base and gives the UK the second lowest area recorded this century. Capping any significant rises have been two main factors: cabbage stem flea beetle (CSFB) concerns and high input costs. Over recent seasons, growers have faced many challenges with CSFB, particularly so in the last couple of seasons in some areas. Those regions who were more severely impacted last season by the CSFB i.e. Eastern areas have seen little area increase for harvest 2022. Conversely, Yorkshire & the Humber saw their best year for CSFB control last year, perhaps inspiring more confidence and resulting in a greater increase in planted area this time. Essentially, regardless of the price of the crop, if pest damage destroys large swathes of it, balance sheets will be severely affected.

High input costs have also likely muffled any substantial area increases. Equally, if spray programmes are delayed or reduced this season, yield impacts may be seen in the crop. However, there is a lot of time and weather between now and harvest, so the extent of any yield implications remains in question for some time to come.

Trade

Imports to date have more than doubled this season to date (Jul-Nov), standing at 134% more than the same period a year earlier.

Chart showing OSR trade

Given the rebound seen in EU production for harvest 2021, and the tight balance sheet for the UK this year, this is perhaps not surprising. To date, just under half (42%) has been sourced from Ukraine. However, reports that the Ukraine is now 97% sold and the global balance sheet still tight might just see import pace start to slow as we move though the second half of the year. This is despite similar demand levels, and could effectively continue the price support observed. The record Australian crop, which came on line in November/December 2021, has helped ease some supply concerns, but the outlook remains tight until the Northern Hemisphere harvest comes to the market.

Demand

Last year, demand was elevated on the previous two years. This is likely a combination of both improving rapeseed crush margins and increased demand as the EU and UK continues to emerge from lockdown restrictions.

Chart showing OSR crush

Last year, demand was elevated on the previous two years. This is likely a combination of both improving rapeseed crush margins and increased demand as the EU and UK continues to emerge from lockdown restrictions.


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