The latest crop forecast report from the European Commission indicates a decrease in rapeseed production from 20.22 million metric tonnes in the May report to 19.91 million metric tonnes, a decline of 301 thousand metric tonnes over the month. The yield also dropped from 3.34 tonnes per hectare in May to 3.29 tonnes per hectare in June, primarily due to unfavourable dry and hot weather conditions experienced by the European Union (EU) during the last few months.
On the other hand, sunflower seed production increased from 10.58 million metric tonnes to 10.8 million metric tonnes, marking a rise of 220 thousand metric tonnes compared to the previous month. However, similar to rapeseed, sunflower yield decreased from 2.23 tonnes per hectare in May to 2.19 tonnes per hectare in June due to extremely hot and dry weather conditions in Europe. It is worth noting that the increase in sunflower production was partially offset by an expansion in the cultivated area, which rose to 4,944 thousand hectares in June from 4,738 thousand hectares in May.
It is important to mention that the production figures provided by the European Commission and Cocereal for rapeseed closely align. Cocereal estimates the EU+UK crop at 21.027 million metric tonnes, while the EU Commission reports the EU 27 crop at 19.91 million metric tonnes. Combining these figures with Mintec's estimations of the UK crop, the total production amounts to 21.19 million metric tonnes. These numbers signify a significant decline compared to market projections from a few months ago, which anticipated a crop closer to 22 million metric tonnes.
There have been no significant developments regarding the rapeseed market as participants await the harvest. Buying interest remains low as most players are adequately stocked, and demand is not increasing prices. However, an interesting observation is that farmers are holding back from selling their produce. This behaviour is somewhat unexpected, and it was initially assumed that it wouldn not last long with the approaching harvest and farmers would be ‘forced’ to sell new crop rapeseed. However, with a substantial barley program sold to China, farmers now have the opportunity to store wheat and rapeseed for longer than anticipated. Consequently, this selling hesitance may allow Ukrainian farmers and sellers to sell significant volumes into the EU. Market players have expressed concerns that a similar supply glut, which the EU has previously experienced due to significant imports from Ukraine, could reoccur. Such a scenario may lead to lower prices for rapeseed and, consequently, rapeseed oil for European producers, who could be compelled to compete against competitively-priced Ukrainian supplies while they last.