Favourable weather conditions throughout the spring have paved the way for a promising year of rapeseed production in Ukraine. According to the latest projections from the European Union's crop monitoring service, MARS June report, production is anticipated to significantly increase to an estimated 5.473 million metric tonnes compared to the previous season's estimate of 3.5 million metric tonnes by the US Department of Agriculture (USDA).
Following a mild winter, winter crops have resumed vegetative growth under favourable conditions. The subsequent rise in temperatures during March has provided further support to crop development, boosting the outlook for rapeseed yields. Additionally, the wet conditions observed in April, along with the absence of thermal stress in May, have reinforced the projections for rapeseed production, as highlighted in the MARS report.
If these figures prove to be accurate, Ukraine may face an excessive surplus of rapeseed that will need to be sold on the international market, as domestic consumption is minimal. Consequently, this substantial supply could directly compete with European sources as Ukrainian farmers and sellers seek to secure cash flow to sustain operations. Market players have expressed concerns that a similar supply glut, which the European Union has previously experienced due to significant imports from Ukraine, could potentially 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.
Furthermore, the profound impact on the rapeseed market could prompt neighbouring countries such as Poland, Bulgaria, Hungary, Romania, and Slovakia to consider extending the existing ban on Ukrainian imports. Mintec learned that the European Commission has allegedly shared draft legislation to this effect with Poland's agricultural minister, Robert Telus, regarding extending the ban on Ukrainian exports until 15th September. Currently, the ban encompasses sunflower seed, rapeseed, wheat, and corn, and is set to expire on 30th June.
The upcoming harvest period in the latter half of June and into July will require close monitoring to ascertain the actual production figures and the potential consequences. The surplus of rapeseed and its implications for the European market, coupled with possible extensions of import bans, are likely to significantly alter market sentiment moving forward.
Mintec will continue to update this story as more details emerge.