.png?width=145&height=54&name=Mintec_Logo_Small_Use_Mono_RGB%20(2).png "Mintec_by_expana_dark"){kind=logo}
Rapeseed oil prices surpass palm oil in the EU market for the first time in two months
The Mintec Benchmark prices for Rapeseed Oil FOB Rotterdam have moved higher than palm oil, marking the first time in two months that rapeseed oil has surpassed palm oil in pricing. It is worth noting that rapeseed oil prices had experienced a historic decline compared to palm oil, moving lower than palm oil pricing for the first time in 25 years due to long coverage in the food sector and limited demand from the biodiesel industry. Detailed information can be found here.
However, the recent reversal can be attributed, in part, to weather concerns. Despite the harvest being just around the corner in late June and July, dry weather conditions over the past month have raised concerns about potential rapeseed crop yields, particularly in Germany and northern France. A distinct north-south weather divide has emerged, with northern Europe experiencing inclement weather compared to the south. This situation has sparked worries that the expected volume of approximately 22 million metric tonnes of rapeseed in the EU27 + UK could be curtailed, potentially increasing reliance on Canadian crops, which might be affected by El Niño, meanwhile, Australian canola could face a similar fate. Consequently, the global supply and demand dynamics could be much tighter than anticipated, prompting some market players to actively seek rapeseed oil, driving demand and pushing prices higher.
Furthermore, recent market developments continue to concern industry players, potentially again favouring rapeseed oil in the biodiesel sector. The federation representing the European Vegetable Oil and Protein Meal Industry (FEDIOL), has expressed worries about the surge in imported biodiesel, as it has had a downward impact on rapeseed and rapeseed oil prices. Additionally, market sources indicate that waste oil from China, labelled as Used Cooking Oil (UCO), may contain significant amounts of palm oil, raising doubts about its claimed sustainability. This development could have far-reaching consequences, potentially increasing the demand for alternative oils like rapeseed oil and leading to price hikes.
Moreover, in recent news, the German government has filed a complaint with the EU regarding alleged fraudulent biodiesel volumes. While the investigation is ongoing, increased scrutiny is expected for Chinese exports of biodiesel and waste oil to the EU. Market participants are closely monitoring these developments, anticipating potential impacts on the forward market. While an outright ban is unlikely, market players believe that increased checks and testing are plausible outcomes. Like the situation involving FEDIOL, greater scrutiny on Chinese exports of oils could mean that “they [oil imports from China] are more trouble than they are worth,” a trader commented to Mintec, potentially increasing reliance on rapeseed and rapeseed oil in the coming months.
