Chart of the week (17)

Farm rapeseed prices increased from previous year

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Farm rapeseed prices rose considerably over the first eight months of the running 2016/17 marketing year. The price level was temporarily up 22 per cent from the previous year. The level of farm prices of rapeseed has been clearly higher in the ending 2016/17 marketing year than in previous years. Rapeseed prices asked by producers surged EUR 77 per tonne from their July 2016 lows to reach a high in February 2017. This translates to a more than 23 per cent rise. The price difference from the previous year varied between EUR 10 per tonne in October 2016 and more than EUR 74 per tonne in March 2017. Current figures published by the German Bundesanstalt für Landwirtschaft und Ernährung (Federal Office for Agriculture and Food / BLE) show that many farmers also made good use of the high price level. Between July 2016 and February 2017, they sold around 4.05 million tonnes of rapeseed to the co-op and wholesale level. This was just less than 3.7 per cent more than in the same period a year earlier. However, asking prices have dropped 6 per cent over the past eight weeks. The reason is extensive rapeseed imports from Australia, Agrarmarkt-Informationsgesellschaft mbH reports. Following a bumper crop, Australia has significant export potential. Over the first two months of 2017, rapeseed imports from Australia rose just less than 42 per cent compared to the same period a year earlier, to 250,000 tonnes.

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Chart of the week (16)

Biodiesel exports increased markedly

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In the 2016 calendar year, German biodiesel exports were noticeably higher than the previous year. The increase in exports to Poland and the Netherlands offset the decline in exports to many other EU-28 countries. In the 2016 calendar year, biodiesel exports climbed 4.8 per cent to 1.56 million tonnes. About 87 per cent of these exports went to other EU-28 countries. The Netherlands continued to be the most important recipient of German biodiesel, showing a 44 per cent rise from the previous year to 0.6 million tonnes. Poland, the second most important recipient, even increased its biodiesel imports by 83 per cent to 0.23 million tonnes. On the other hand, many EU-28 countries reduced imports from Germany, Agrarmarkt Informations-Gesellschaft (mbH) reported. French imports fell most sharply, seeing a drop of 53 per cent. However, Norway, Austria and Sweden also imported more than 40 per cent less than in 2015. Trade in German biodiesel with the US was significantly more dynamic, with exports increasing eightfold from the previous year. However, exports were at a comparatively low level of 85,000 tonnes. Shipments to Switzerland also surged substantially, with volumes up 155 per cent at 45,000 tonnes.

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Chart of the week (15)

EU-28 oilseed crop expected to be larger than previous year

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The 2017/18 oilseed output in the EU-28 could clearly exceed last year's production, an EU Commission report indicates. Especially rapeseed and sunflower crops are estimated larger. The European oilseed associations Copa and Cogeca disagree with the Commission’s forecast. The EU Commission pegged the 2017 EU-28 oilseed harvest at around 34.2 million tonnes in its latest monthly report. Consequently, production of rapeseed, soybeans and sunflowerseed together would exceed the previous year’s figure by 8.3 per cent or 2.6 million tonnes. According to the outlook, the 2017 sunflower crop could rise 6 per cent to more than 9 million tonnes. Soybean production is expected to remain virtually unchanged at 2.5 million tonnes, just less than 1 per cent above the previous year's level. Rapeseed, the single most important oilseed by quantity in the EU-28, is forecast at 22.6 million tonnes, up around 13 per cent from 2016. On the other hand, the agricultural committee Copa-Cogeca takes a somewhat dimmer outlook, estimating the EU-28 oilseed crop at just less than 31 million tonnes. 2017 production of soybeans and rapeseed, in particular, is seen to fall below the previous year's level. According to Agrarmarkt Informations-Gesellschaft (mbH), it is too early to make a final evaluation. Dry weather that has been reported for some production regions in the EU-28 and occasional pests such as pollen beetle can still give rise to substantial changes in the oilseed balance. Weather conditions during the incipient flowering stage are what determines yields. For this reason, the Union for the Promotion of Oil and Protein Plants e.V. (UFOP) is, first and foremost, hoping for the now-needed rains to come. If the crop forecast comes true, 2017 oilseed production could be the second largest in ten years, behind the 2014/15 record.

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Chart of the week (14)

EU rapeseed area slightly up from previous year

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In the EU-28, an estimated area of 6.6 million hectares is planted with winter rapeseed for the 2017 harvest. This translates to a more than 100,000 ha rise from the previous year.

The trends are very different in the different member states. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), the rapeseed hectarage in Germany and Denmark is not expected to change to any significant degree from the previous year. By contrast, in France and, first and foremost, the UK, there are signs of considerable reduction. However, this decline in area will be more than offset by the substantial surge in Romania and Poland. The rapeseed area in Romania has been on a steady rise for several years and will exceed the five-year mean by more than one third in 2017. In contrast, Polish rapeseed production benefits from the fact that there have been fewer losses due to winter kill this year than a year earlier, when the area affected was higher than average. Due to the consistently mild winter, crops have hardly been damaged anywhere in Europe. However, in some regions conditions were too dry at the time of sowing, leading to patchy crops and forcing farmers to plough up the land in some cases. But soil moisture content is borderline at the moment too, despite recent rainfall in some regions of Europe, and more rain is urgently needed because the stem elongation phase with the transition to flowering is setting in. UFOP pointed out that in the two to three weeks to come, rapeseed water requirements to ensure a good yield will be at their highest.

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Chart of the week (13)

Rapeseed prices are well above those of wheat

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The ratio of futures market quotations of rapeseed to wheat increased continually over the 2016/17 marketing year. The figure temporarily rose to 2.3. Paris futures market quotations of wheat and rapeseed from the new 2017 harvest show very different curves. Whereas wheat prices have been very stable at a low level in view of ample global supply, rapeseed prices have been more volatile at a significantly higher level. In other words, new-crop 2017 wheat was valued at EUR 181 per tonne at the beginning of the 2016/17 marketing year. Since then, prices have fallen gradually to currently 168 per tonne. This translates to a 7.3 % slide. Rapeseed from the 2017 harvest hit its low at EUR 344 per tonne at the beginning of August 2016, firming at EUR 397 per tonne by mid December. Consequently, the difference between the highest and lowest prices was EUR 53 per tonne. However, rapeseed prices still remained above EUR 380 per tonne over the past several months until coming under pressure from the record crop in South America and declining rapeseed oil prices, Agrarmarkt Informationsgesellschaft mbH (AMI) reported. Except for a few weeks in July 2016, the ratio between rapeseed and wheat prices has always been above 2. At the end of 2016, one tonne of rapeseed was even valued at 2.3 times the wheat price.

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Chart of the week (12)

Prices of GMO-free oilseed meals on the rise

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Prices for GMO-free soybean and rapeseed meal have firmed significantly over the past few weeks. Rising demand has led to a shortage in supplies and sent prices rising. Asking prices for oilseed meals clearly reflect the difference in availability. Rapeseed meal on nearby positions is scarce and, as a consequence, expensive. Climbing demand for rapeseed meal for GMO-free dairy feeding has also contributed to pushing the situation further. GMO-free soybean meal is also in short supply at the moment and therefore expensive. As a consequence, its price trend is contrary to that of conventional soybean meal. GMO-free soybean meal containing 45 per cent crude protein rose EUR 8 per tonne to EUR 471 per tonne last month. Over the same period, rapeseed meal even surged EUR 9 per tonne, reaching EUR 225 per tonne ex works. Prices asked from livestock farmers were also raised. GMO-free soybean meal was increased 3 per cent whereas rapeseed meal went up 2.6 per cent. The distinct differences between rapeseed meal and GMO-free soybean meal are due to the differences in protein content and, consequently, feed value. However, the difference in feed value is mainly relevant for pig fattening farms, because meat formation primarily depends on protein content and quality in feed mixes. This does not apply to dairy cow feeding, as milk yield is not affected when replacing soybean meal by rapeseed meal. For more information, see UFOP's paper on the use of extracted rapeseed meal in dairy cow feeding - available in German only - at http://www.ufop.de/agrar-info/erzeuger-info/fuetterung/einsatz-von-rapsextraktionsschrot-in-der-milchkuhfuetterung.

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Chart of the week (11)

Ample supply weighs on soybean prices

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A bumper crop in South America has led to a strong increase in already ample global supply. Whereas consumption was only slightly up, supplies have grown significantly, putting downward pressure on soybean prices. In its March forecast, USDA raised its outlook for global soybean production in 2016/17 further. World output was estimated more than 4 million tonnes higher than the February forecast to 341 million tonnes, up just less than 9 per cent year-on-year. The rise is due almost exclusively to the expected 4 million tonne increase for Brazil. Consequently, the country would harvest around 108 million tonnes, just less than 22 million tonnes more than 2015/16. The estimates for Argentina and Paraguay remained unchanged at 55 million tonnes and 9.2 million tonnes respectively. However, market observers pointed out that production would likely be much larger than previously estimated, Agrarmarkt Informationsgesellschaft (AMI) reported. 2016/17 US production was seen unchanged at 117 million tonnes. Based on the bumper crops in the US and Brazil, expected global ending stocks were also raised to 82.8 million tonnes. This translates to an 8 per cent rise from 2015/16. Due to the even more abundant global supply, soybean futures prices came under substantial pressure, tumbling to the lowest level in nine weeks.

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Chart of the week (10)

Strong demand for biodiesel from Germany

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Export figures from the German Federal Statistical Office show a growing interest in biodiesel from Germany. Especially in the US, demand increased substantially. German biodiesel exports amounted to around 1.54 million tonnes in 2016. This translates to a 3.4 per cent rise year-on-year. Nevertheless, exports fell short of the 2014 record. EU member states continue to be the key recipients, absorbing around 87 per cent of German exports. The top recipients, the Netherlands and Poland, ordered significantly more biodiesel than a year earlier. French imports from Germany dropped 53 per cent, whereas Spain and Finland in particular purchased much more than 2015. According to figures published by the German Federal Statistical Office, the US was the most important third country, with imports reaching 85,000 tonnes. This was almost seven times the previous year's figure. At the same time, German imports of foreign biodiesel went up approximately 38 per cent to 718,000 tonnes. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), this was the largest quantity imported since 2012. More specifically, deliveries from the Netherlands rocketed 87 per cent to 248,000 tonnes. At 129,000 tonnes, imports from Malaysia of were at almost the same level as 2015.

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Chart of the week (09)

European 2017 rapeseed harvest estimated higher than previous year

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The 2017 rapeseed crop in the EU-28 will probably be 8 per cent higher than the previous year, due to lower than expected winterkill losses. Fears about insect infestations continue to generate uncertainty. Rapeseed crops look good across Europe. However, Strategie Grains reduced its forecast of the coming EU rapeseed crop by 0.5 million tonnes to 21.56 million tonnes. The main reason was indications of larger winterkill losses in Poland, which, however, have not yet been finally confirmed. Nevertheless, Poland is also expected to see an up to 21 per cent rise in rapeseed output compared to 2016. According to Agrarmarkt Informationsgesellschaft (AMI), any further major losses are not to be expected in the EU-28, with the result that the harvest estimate clearly exceeds the previous year's figure. In France, the rate of ploughing up rapeseed land following the winter will not be higher than usual. However, the around 7 per cent reduction in rapeseed area compared to 2016 will limit the crop potential considerably. German rapeseed production is put at 5.1 million tonnes, up 0.5 million tonnes from a year earlier. In the UK, the winter rapeseed area is reported to have fallen to a 13-year low. Initial forecasts estimate the 2017/18 area planted with rapeseed at 0.52 million hectares, while putting rapeseed output at 1.8 million tonnes.

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