The Mintec Benchmark price for Rapeseed Oil FOB Rotterdam [Mintec Code: RSOR] was assessed at €1,200.50/mt on 1st December 2022 the lowest price seen for the commodity since 9 August 2021. The price decline was attributed to ample supply from key producing nations such as Canada and the EU and good overall coverage for market players until early 2023 meaning that they do not need to dip into the market. This is causing sellers to offer the product for less in an attempt to attract buying interest.
In addition, the supply of rapeseed oil has increased, on the back of significant crushing within the EU. This has led to a rapeseed oil supply glut within the EU, with no ready buyers for the material. Besides, the biodiesel sector, which usually has ready buyers of rapeseed oil at this time of year, is currently importing Used Cooking Oil (UCO) from China at prices far below rapeseed oil to use as biodiesel feedstock. However, the purchase has not been without controversy. Industry sources told Mintec that the supply is at least 70% palm oil, rather than the supposed UCO, which is why it was priced so competitively. Despite this, if the price of the material remains cheap, it could be a viable alternative for the biodiesel sector, meaning that rapeseed oil purchases may not be seen for some time, thereby potentially lowering prices from current levels in the coming weeks and months.
A trader told Mintec, “The market has pretty much all the volumes it needs until the end of 2022. There is no need for players to dip into the spot rapeseed oil market. Coverage in 2023 is much more lacking, and for the first time in a long time, we saw rapeseed oil enter a contango state [spot prices lower than those for forward delivery]. This is unusual but suggests an oncoming strong supply and no real bullishness to be found. We have also seen significant crushing, much like sunflower oil, as market players have tried to cash in on the high prices”.