Rapeseed crushers’ relief may prove short-lived.
Sure, world supplies are enjoying a healthy rebuild.
Backed by improved harvests in Australia, Canada and the European Union, world output for 2022-23 is estimated up more than 10m tonnes, at 82.5m tonnes, by the US Department of Agriculture.
That will exceed consumption, for the first time in four years, by 3.3m tonnes to enable a recovery of nearly 50%, to 6.81m tonnes, in the world’s wafer-thin stocks.
But already, in Europe in particular, there is cause to prepare for renewed tightness ahead.
Europe’s persistent drought and heat isn’t just a threat to the corn and sunflower crops which will he harvested over the next couple of months, cutting pollination rates and curbing development of kernels and seeds.
It is also a threat to autumn-sown crops planted for the 2023 harvest.
That is especially so for rapeseed, which has a particularly early seeding window.
The oilseed is far less forgiving in its planting dates than, say, winter wheat, which can be seeded late into the calendar year (and even beyond, depending on geography and conditions).
Rapeseed should ideally be sown by mid-September.
‘Continuation of above-average heat’
Sure, there is time left for the rainfall needed to give rapeseed planting a fillip.
But not that much. And the outlook is not encouraging. According to Refinitiv (as it made an EU corn crop downgrade) the “latest weather forecast calls for a continuation of above-average heat across Europe”.
Although heavy rains are expected locally in Poland, Germany, Bulgaria, and Greece, the “rest of the continent will suffer precipitation deficits”.
Prospects don’t look great for EU rapeseed area (which for the latest harvest reached 5.74m hectares on European Commission estimates) recording a fourth year of recovery in 2023-24.
Back to deficit?
In fact, it was dryness which, besides worries over cabbage stem flea beetle, was the big driver of the collapse of some 20% in EU rapeseed area in 2018-19 low to 5.1m hectares, the smallest in 14 years.
For EU output next year to revert to 2018-19 levels would be a big blow to hopes of a further world production surplus in 2022-23.
An end of La Nina, which has supercharged Australian winter crop yields by bringing the east of the country ample rains, would bode ill too.
Australia’s yield of canola, the rapeseed variant, in the three La Nina-boosted crops, is pegged at an average of 1.90 tonnes per hectare by the USDA – 64% above the average for the previous three years.
Rapeseed vs wheat
Against that backdrop, it looks surprising that rapeseed futures are not fighting even harder for ground in EU plantings programmes.
At E627.25 a tonne as of early deals on Wednesday, Paris November 2023 rapeseed futures were 1.04 times as much as December 2023 winter wheat, the oilseed’s main competitor in autumn sowings.
That is a lower ratio than the 1.13 as of this time last year, if in line with that of 2020 and 2019.
Unless EU rain is forthcoming, expect that ratio to increase in a bid to buy extra rapeseed acres.