EU Winter Rapeseed Plantings Above Expectations Yet Biodiesel Demand Returns
Market players have reported to Mintec that winter planting of rapeseed in the EU were likely between 5.9 and 6 million hectares. If realised come harvest in June and July, this would be the highest level of plantings in five to six years within the EU and could provide downward price pressure to rapeseed oil even before the harvest period, reducing prices further from current levels.
A trader commented to Mintec, “spot rapeseed oil is in limited demand. We see some interest in the forwards but even then, buyers want to pay low prices. Supply of rapeseed right now, and thus rapeseed oil, is high and Canadian production is back to normal levels after the issues in the previous season. From a fundamental standpoint, things look bearish.”
The supply of rapeseed oil has increased on the back of significant crushing within the EU. Crushers brought rapeseed and crushed it, hoping to enjoy the strong margins of the previous months and weeks. This has led to a rapeseed oil supply glut within the EU, with limited buyers for the material. However, it has been reported to Mintec that European biodiesel players are now interested in purchasing volumes “if the price is right,” as one biodiesel player told Mintec. If this is the case across the EU more generally, it could see demand for rapeseed oil as a replacement for other materials, such as Used Cooking Oil (UCO), returning and may draw down the oversupply within the marketplace. Besides, due to the phasing out of palm oil and soy as biodiesel feedstocks, it may leave biodiesel players with little choice but to rely on rapeseed oil as a primary feedstock, thus lowering supply and increasing prices on the renewed demand.
A biodiesel producer told Mintec, “the biodiesel industry had been happy to buy UCO, but now we’re returning to look at rapeseed oil. Prices on the forwards are reasonable and we’re looking to get some volumes in. I think it’s common across the industry – our competitors in Germany and Austria have been reaching out to suppliers as well. Although we haven’t been in a bidding war or anything like that, if this continues prices may very well go up on the forward positions.”
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