Rapeseed oil demand surges

October 4, 2023

2 mins read

Rapeseed oil demand surges

 

In recent days, the rapeseed and rapeseed oil market has seen a flurry of activity, marked by a rapid increase in offers and bids for nearby positions. This surge in market dynamics coincides with several noteworthy developments that are reshaping the landscape of this sector.

Firstly, the demand for Rapeseed Oil (RSO) within the food sector has experienced a notable resurgence. This revival in demand follows a period during which many market players patiently awaited lower prices, expecting a decline due to harvest pressure. The resurgence in RSO demand is a clear indication of shifting market sentiment and a willingness among participants to actively engage in trading. Remarkably, this demand resurgence has resulted in a situation not seen in weeks—both key buying sectors in the market, namely food and biodiesel, are now active simultaneously. This shift represents a departure from the prior dominance of interest in the biodiesel segment.

Market insiders consistently describe rapeseed crush margins as "exceptional," fueling an acceleration of EU crush activity throughout September. These strong margins have engendered expectations of continued high crush levels extending into October and beyond. However, despite this robust crushing activity, nearby volumes of RSO remain constrained. This constraint persists even as crush margins for rapeseed, especially from a European Union (EU) perspective, remain exceptionally favourable. All three components of the crushing process—rapeseed, meal, and oil—offer enticing returns, prompting crushers in prominent EU countries such as France, Germany, and Poland to shift their focus toward rapeseed crushing operations to leverage these attractive margins.

Furthermore, nearby Rapeseed Methyl Ester (RME) margins have maintained their strength, driving demand for RME, particularly in anticipation of the impending cold winter months in the EU. The severity of temperature drops could influence the increased use of rapeseed oil in RME blends, a measure adopted to safeguard engines in colder weather conditions.

Market players have commented to Mintec that the recent surge in demand, coupled with constrained nearby volumes of RSO, suggests the potential for upward price pressure in the rapeseed and rapeseed oil market. If continued buying from both the food and biodiesel sectors persists and further depletes the available supply, it could lead to increased competition among industry participants for the limited resources. 

Kyle Holland
Kyle Holland

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