Chart of the week (48)

Rapeseed cake - a cost-effective alternative

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Decentralised oil mills provide a considerable contribution towards supplying their regions with rapeseed cake. Due to the special method used to make rapeseed cake, this GVO-free protein feed contains more fat than rapeseed meal, with fat being a major energy source in animal feed. Whereas prices for GVO-free soybean meal delivered free to yard jumped in the early summer due to tight supply and rising world market prices, rapeseed cake and rapeseed meal only saw a comparatively slight price rise. However, rapeseed meal was temporarily more expensive than rapeseed cake. As demand slowed, prices went down again. Above all, rapeseed meal fell to new lows, while oilseed cake remained at the same level. Soybean meal remained relatively expensive and most recently even surged, driven by firm forward prices and the weak euro which also made imports more expensive. The rise also pulled up asking prices for the competing meals. However, as demand for rapeseed meal continues to be slack, nearby batches that are unloaded onto the market offer opportunities from time to time. Protein in rapeseed meal is even less costly, Agrarmarkt Informations-Gesellschaft mbH reports. The two-year average price free farm for rapeseed meal protein was 30 per cent below that for 45 % soybean meal protein. Clearly, not all animal farmers are aware of the ruminant feed cost saving potential rapeseed meal offers. For this reason, UFOP believes that there is still a considerable need for information and advice.

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Chart of the week (47)

Rise in vegetable oil prices continues

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A decline in palm oil production and sharp increase in soybean processing have sent vegetable oil prices climbing. Buoyant demand and surging crude oil prices are additional factors driving the development. Vegetable oil prices went up substantially over the past six months. The price spread between soybean and palm oil has narrowed significantly since the beginning of August 2016. Prices of palm oil soared by around 24 per cent at the beginning of August, to almost the level of soybean oil. The reason was a surprising 3 per cent decline in output while demand continued to be brisk, which spawned uncertainty. At the same time, decreasing US supplies of soybean oil have driven up soybean oil prices significantly since mid October. US soybean processing reached new record levels and sent soybean prices up as a result. The development in the vegetable oil market is fuelled by the price of crude oil. As crude gets more expensive, vegetable oils gain a competitive advantage as feedstock for biodiesel, boosting demand. In other words, the firming trend in vegetable oil prices will continue on strong demand despite the record soybean crop in the US.

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Chart of the week (46)

USDA raises already-record soybean crop forecast

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The US soybean harvest is coming to a close. Nevertheless, the USDA sprang a surprise with its latest harvest estimate. However, the price effect was fleeting. The 2016 US soybean crop was forecast higher than expected. The previous month's forecast was raised 2.5 million tonnes to 118.8 million tonnes, outpacing the previous year's figure by just under 12 million tonnes. Higher yields in Minnesota, North Dakota and Kansas led the USDA to raise the overall yield for the US to 35.3 decitonnes per hectare. Prices at the futures exchange responded with significant losses which were, however, recouped over the subsequent few days. Since the USDA raised its US exports estimate by 0.5 million tonnes to 55.8 million tonnes, it also at the same time lowered domestic crush by 0.5 million tonnes to 52.5 million tonnes, a figure closer to the previous year's level of 51.3 million tonnes. Consequently, exports are taking a new place in the US soybean balance sheet as of this year as they draw level with domestic use. US season-ending soybean stocks for 2016/17 were projected at 13.1 million tonnes. This figure not only exceeds expectations by 2.3 million tonnes, but also outstrips the previous year's level by just under 8 million tonnes.

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Chart of the week (45)

Sunflower production up from previous year

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Despite a reduction in sunflower area, sunflower production in the EU-28 picked up from the previous year. In particular, the extensive production in Hungary accounts for the growth. According to current estimates, the 2016 production of sunflowerseed will likely outstrip the fairly average 2015 output. Although the area planted with sunflowers dropped slightly from a year earlier, harvest estimates exceed the previous year's figures throughout the EU. According to information published by Agrarmarkt Informations-Gesellschaft mbH, the EU Commission puts the 2016 sunflower area at around 4.16 million hectares, which is a minimal reduction of 0.7 per cent compared to the previous year. By contrast, the EU-28 sunflower harvest is currently forecast at 8.13 million tonnes, up 4.4 per cent from the year-ago level. The growth in output despite the reduction in area is accounted for by an increase in productivity. Compared to 2015, average yields rose by 5.4 per cent to just less than 20 decitonnes per hectare. The key reason for the increase in harvest and yield in the EU-28 is the rise in Hungarian output. Hungary has become the biggest producer of sunflowers in the EU-28 in the current season.

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Chart of the week (44)

Rapeseed prices rise sharply

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Most recently, the average price farmers received for rapeseed was at just under EUR 380 per tonne free storage facility, a level not seen since May 2014. The factors that contributed to supporting the rapeseed price originated, first and foremost, from overseas. German rapeseed prices have climbed continuously since the 2016 harvest began. However, the price surge has been especially sharp over the past two weeks, Agrarmarkt Informations-Gesellschaft mbH reports. Rapeseed prices were, first and foremost, supported from overseas. On the one hand, prices for soybeans went up significantly due to brisk demand from China, surpassing the psychological barrier of USD 10 per bushel (EUR 340 per tonne). On the other hand, the rapeseed harvest in Canada is severely hampered by snow and rainfall. At the ICE in Winnipeg, quotes soared by ten per cent in only three weeks. Vegetable oil prices also rose strongly in response to brisk demand for, and tight availability of, palm oil. At the same time, crude oil trended higher, whereas the weak euro increased EU export prospects. In other words, forward prices of rapeseed in Paris climbed above the EUR 400 per tonne mark to an 18-month high and pushed up producer prices in Germany.

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Chart of the week (43)

Prices for vegetable oils surged

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Spot prices for vegetable oils were raised significantly in the wake of the rally for palm and soybean oil. Having risen to a three-year high at EUR 830 per tonne, rapeseed oil is more expensive than sunflower oil. Prices for rapeseed oil picked up especially sharply as their surge was additionally driven by rising feedstock costs and the weak euro (which encourages exports). Feedstock prices are also supported by the fact that conditions for harvesting rapeseed have been less than optimal following snowfalls in Canada. Moreover, the European biodiesel industry has an increased demand for rapeseed oil because it has to comply with the quality requirements for winter diesel as laid down by the biodiesel standard. On the European vegetable oil market in Rotterdam, rapeseed oil is more expensive than sunflower oil, reflecting the contrary supply situation clearly. In the Netherlands, even premiums are currently paid on contracts for rapeseed. In Germany, the situation is exacerbated by the low water levels on inland waterways. On the one hand, feedstock cannot be delivered, and, on the other, vegetable oil cannot be called forward. Agrarmarkt Informations-Gesellschaft mbH reports that the rally on the futures market was triggered by the reduced supply outlook for palm oil and the small supplies of soybean oil in the US.

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Chart of the week (42)

More pulses in compound feed

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The changes in agricultural aid have given a boost to the production of legumes. Pulses are mainly used in farm-made feeds as a major source of protein. However, the mixed feed industry has discovered home-grown pulses too. In view of the Greening requirements, German farmers planted around 160,400 hectares with legumes in 2015. The harvest of peas, field beans and sweet lupines amounted to around 450,000 tonnes. This was a level of quantity that also aroused the interest of the German mixed feed industry, which, according to the Federal Office for Agriculture and Food (BLE), used around 88,000 tonnes of pulses in compound feeds in 2015/16. Although this figure is small compared to that of cereals, it provides a clear signal after several years of decline. After all, the quantity processed was more than twice the previous year's volume. No other feed component has seen such growth rates. However, the chances are that this trend could soon end as the EU Commission plans to introduce more stringent requirements for receiving the Greening payment, Agrarmarkt Informations-Gesellschaft mbH reports. The tightening of conditions would include a ban on applying crop protection products in legume production, although control of pests and diseases is essential to maintaining crop yields and quality. As a result, growing pulses would become unattractive to farmers. Pulses would sink back into their tiny niche, delivering a heavy blow to the German government's protein plant strategy.

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Chart of the week (41)

Strong demand for German rapeseed oil in 2015/16

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German exports of rapeseed oil hit a three-year high in the 2015/16 marketing year. Order volumes from some EU member states and third countries grew substantially. German 2015/16 exports of rapeseed oil climbed significantly, according to figures published by the German Federal Statistical Office. At around 1.1 million tonnes, they were up almost 16 per cent from 2014/15. Around 91 per cent went to other EU countries, which was 3 per cent less than the previous period. The Netherlands, the hub of international trade, were again the main buyer, accounting for 484,000 tonnes (up 7 per cent). The Netherlands were followed by Poland, where imports were up by 53 per cent to 157,000 tonnes. Belgium occupied third place, despite a massive decline in imports to 87,000 tonnes. The EFTA states (Iceland, Norway, Switzerland), on the other hand, purchased a record volume of 78,000 tonnes, Agrarmarkt Informations-Gesellschaft mbH reports.

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Chart of the week (40)

Strong increase in rapeseed imports in 2015/16

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The German Federal Statistical Office reports significant increases in rapeseed imports in 2015/16, which reached a record peak at 5.4 million tonnes. In the 2015/16 marketing year, the oil mill industry imported 5.4 million tonnes of rapeseed. This was up just over 14 per cent from a year earlier and the highest quantity ever. Traditionally, the largest quantity came from the EU-28, although their share decreased considerably to 86 per cent. The main EU supplier, France, supplied 1.7 million tonnes, approximately 12 percent more than the previous year. In addition, German imports of non-EU rapeseed via the Netherlands rose to just under 672,500 tonnes. According to information published by Agrarmarkt Informations-Gesellschaft mbH, this quantity translates to a record high and double the 2014/15 figure. The largest third-country supplier, Australia, was overall third most important supplier despite substantial growth in exports to an all-time high of 636,000 tonnes.

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