Market Players Suggest Rapeseed Oil Prices may Drop Further

Market Players Suggest Rapeseed Oil Prices may Drop Further

The Mintec Benchmark Prices [MBP] for Rapeseed Oil FOB Rotterdam [Mintec Code: RSOR] was assessed at €859.50/mt on 13 April down €66.00/mt, representing a price decrease on the week, due to the continued large stocks held by Canada, Europe, Ukraine and Australia. Although significant crush has drained some of these stocks, supplies are still far too high and are currently being combined with very limited demand from both the biodiesel and food sectors which make up almost all the addressable demand for rapeseed and rapeseed oil.

A trader commented to Mintec, “To be honest, not much has changed on the rapeseed or rapeseed oil markets. High supply is still apparent and low demand is too. I can’t see any significant bullish factors for either right now. The only thing that could move the needle significantly is very substantial buying by international players, such as China, but at a sustained level. The purchases from a few weeks back seem to have died off and with it any notion of a price revival.”

Mintec has learnt that international demand from China which briefly moved prices up may be limited in the future, this is because China has a fairly full pipeline of deliveries for April, May and June and therefore may not need to seek additional imports in the near term. A limitation of buying from China is likely to be key as “without Chinese buying I don’t see any way prices don’t fall further” a trader told Mintec. 

Biodiesel demand continues to be very limited due to volatile Rapeseed Methyl Ester (RME) prices and mild weather. Therefore, biodiesel producers are foregoing rapeseed oil purchases and are instead opting for long-chain vegetable oils and used cooking oil imported from China. Since biodiesel usage accounts for approximately 70% of rapeseed oil demand, limited demand from the sector is likely to mean that upward price moves will be limited in the coming weeks.

A biodiesel producer told Mintec, “RME has very little demand right now and will have even less as we enter the summer. Even if we look longer term and towards winter 2023 where RME is very useful, there are such huge supplies and a large oncoming harvest from Europe there is no need to buy any serious volumes.”