In certain regions of the EU and Ukraine, the slow progress of harvesting and unfavourable weather conditions, including severe rains and hail in Southern Ukraine, is adding upward pressure to rapeseed and rapeseed oil prices. Concerns are arising about potential lower yields as delayed harvesting raises doubts about crop productivity. Although it is difficult to extrapolate poor weather conditions to the overall Ukrainian crop, market players are anticipating a reduction in production, estimated to be between 50,000 and 100,000 metric tonnes.
Despite the potential decrease in production, Ukraine is still expected to yield a substantial rapeseed crop of approximately 3.7 million metric tonnes, according to Mintec calculations. Therefore, the upward price pressure caused by adverse weather may be limited and not sustained for an extended period.
Similar to the previous week, European farmers who have enjoyed higher prices in the past two seasons are currently hesitant to sell their rapeseed. This hesitancy raises concerns that Ukrainian supplies may dominate the market, potentially sidelining European sellers for a significant period. Mintec has received information indicating that European players have already purchased around 30,000 metric tonnes of rapeseed oil from Ukraine, primarily purchased by German players on a DAP (Delivered at Place) basis. If this trend continues, it could exert significant downward pressure on EU rapeseed oil prices as EU sellers of rapeseed oil may be ‘forced’ to compete with lower-priced volumes from Ukraine.
One trader shared their perspective with Mintec, stating, "I can get the same quality [rapeseed oil] on time and cheaper; why would anyone buy European FOB (Free on Board) volumes? Buying from Ukraine is a no-brainer." This sentiment reflects the growing attractiveness of Ukrainian rapeseed oil over EU volumes.
Furthermore, Mintec has learned that due to a shortage of available sunflower seeds for crushing, estimated at approximately 600,000 metric tonnes (an unusually low number for this season), crushers such as Delta Wilmar, Kernel, All Seeds, OSP, and others have reportedly shifted their focus to crushing rapeseed. This strategic move by Ukraine has raised concerns among EU players that the upcoming large rapeseed crop, combined with the capacity to crush significant volumes, may make Ukrainian rapeseed oil far more appealing than EU volumes for an extended period. If this is indeed the case market players have commented to Mintec they will import large volumes as long as “the price is right” potentially adding downward price pressure in not only the EU but global rapeseed oil markets.
The impact of adverse weather delayed harvesting, and shifting market dynamics in rapeseed and rapeseed oil remains a subject of close monitoring as the industry navigates the potential consequences on prices and market competition.