Chart of the week (25 2022)
USDA raises soybean production forecast
In its latest monthly report, the USDA raised its global harvest estimate and foreign trade forecast for soybeans for 2022/23.
According to the USDA estimate, global soybean production in the marketing year 2022/23 is set to reach 395.4 million tonnes. This is up 680,000 tonnes on the previous month's estimate and up 12.3 per cent from 2021/22. The key reason for expectations of a bumper crop was prospects of increased soy supply in Ukraine, although forecasts from this region should be viewed with caution due to the continuing war. The USDA expects Ukrainian soybean production at around 2.8 million tonnes, which would be 500,000 tonnes more than previously expected, but nevertheless 1 million tonnes fewer than 2021/22. The estimates for Brazil and Argentina remained unchanged from the previous month at 149 million tonnes and 51 million tonnes respectively.
In view of the larger supply of soybeans, 2022/23 world trade is also expected to significantly exceed the previous year's volume. More specifically, the USDA put exports at 170.3 million tonnes, up 420,000 tonnes from the May forecast and 9.2 per cent from the level in 2021/22. Above all, the figure of the Ukrainian export potential in was raised.
As a consequence of higher yields, the USDA revised Argentine soybean output 2021/22 upward 1.4 million tonnes to 43.4 million tonnes. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the same applies to Brazilian production in 2021/22. Currently forecast at 126 million tonnes, Brazilian soy production is seen 1 million tonnes higher than in the May forecast. The upward revision was due to a larger soybean area in Mato Grosso. World soybean production in the running 2021/22 marketing year is projected at around 352 million tonnes, which would be 2.6 million tonnes more than previously expected.
Chart of the week (24 2022)
FAO cereal and vegetable oil price indices with contrasting trends
Whereas the FAO cereal price index continued to climb and hit a new record high in May, the vegetable oil price index declined, but still remained well above the previous year's level.
The FAO vegetable oil price index decreased 8.3 points or 3.5 per cent to, on average, 229.3 points in May, but was still clearly above its year-earlier level. The decline was mainly caused by falling prices for palm, sunflower, soybean and rapeseed oil. Such falling prices, in turn, were partly due to the end of the Indonesian ban on exports of refined palm oil. Other reasons included the drop in world market sunflower oil prices from a record high level and reduced asking prices for soybean and rapeseed oil in response to waning demand. In the case of palm oil, prices were driven up by the persistent labour bottlenecks in Malaysia and the associated limited supply of palm oil.
The FAO cereal price index reached an average of 173.4 points in May 2022, which was up 2.2 per cent month-on-month. This means that the gap over the previous year amounted to a spectacular 30 per cent. The rise was sparked by the increase in international prices for wheat after India announced an export ban and also concerns about export and harvest conditions in several leading wheat-exporting countries, especially lower production prospects in Ukraine due to the war. Prices for maize declined month-on-month based on slightly improved seeding conditions in the US, larger seasonal supply in Argentina and the imminent start of Brazil's main maize harvest. International sorghum prices also decreased, whereas prices for barley picked up based on strong wheat markets and concerns about harvesting conditions in the EU. International rice prices increased for the fifth successive month in May.
Chart of the week (23 2022)
EU Commission expects significantly larger grain legume crop
Based on a 6 per cent expansion of legume production area to 2.5 million hectares, the EU Commission expects the 2022 legume harvest in the EU-27 to reach around 6.9 million tonnes. This would translate to a 16 per cent rise year-on-year. The extent of production area would hit a 5-year high.
Just as in the previous year, soybeans will presumably take up the largest share of the legume production area with a 5.2 per cent increase to a prospective area of 989,000 hectares. According to Agrarmarkt Informations-Gesellschaft (mbH), this would be a new record. In the latest estimate published by the EU Commission, the feed pea area is seen to expand just less than 7 per cent to 824,000 hectares. At just over 6 per cent and 8 per cent respectively, field beans and sweet lupins are also set to rise to 506,000 hectares and 222,000 hectares respectively.
Due to the expansions in hectarage devoted to soybeans, feed peas, sweet lupins and field beans, the harvest 2022 will probably also be larger, depending on future weather conditions, of course. As things stand at present, the soybean harvest could increase just less than 11 per cent year-on-year to 2.9 million tonnes. The output of dry peas will presumably to grow 21 per cent to 2.2 million tonnes. Field beans are expected at around 1.4 million tonnes, which would be up just less than 27 per cent on the previous year. By contrast, sweet lupins are seen to fall 12 per cent to 284,000 tonnes, despite a significant expansion in production area and mainly due to expected lower yields.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has said that the potential for grain legume production is far from being fully exploited. The association holds that the success of the European or national protein plant strategy is also judged by increases in production area. Legumes in all their diversity could go a long way towards enhancing biodiversity, climate change mitigation and the economic resilience of crop rotation in a comparatively short time. The UFOP has emphasised that to this end funding should be improved as the common agricultural policy (CAP) is reformed – along the lines of the benefits and targets of the Commission's "Farm to Fork" strategy.
However, the key factor is that the market, i.e. demand for grain legume-based products, must "pull" the production area. The UFOP has underlined that the potential for the development of legume crop uses is far from being fully exploited. The association has strongly demanded that funding of the BMEL protein plant strategy be improved. The association has complained that while the power sector is being swamped with support, the agricultural sector has to make do with relatively modest funding amounts to move things forward.
Chart of the week (22 2022)
Australia: larger rapeseed area and lower yields expected
Previously good seeding conditions in many parts of the Australian production regions have allowed producers to expand the rapeseed area essentially as planned. The AOF expects the rapeseed area to reach 3.3 million hectares. This would translate to a 12 per cent rise year-on-year. However, 2022 yields are not expected to hit new record highs. In other words, the harvest could even be smaller than in the previous year. The 2021 yield amounted to 21.3 decitonnes per hectare. The 2022 rapeseed harvest is currently forecast at 5.2 million tonnes, which is down 17 per cent compared to the previous year's figure. According to the AOF, this would be an average yield.
Conditions at the time of seeding have so far largely been favourable, with sufficient rain in New South Wales, Victoria and Western Australia in the first three months of 2022. The AOF has forecast that on the east coast, the good conditions are likely to continue into winter, because the La Niña weather phenomenon is set to last longer than initially expected. By contrast, the Australian south is expected remain too dry.
s Jahres 2022. An der Ostküste dürften die guten Bedingungen bis in den Winter hinein anhalten, da sich das La-Niña-Wetterphänomen länger als zunächst erwartet halten dürfte, prognostiziert die AOF. Im Süden bleibt es dagegen zu trocken.
Chart of the week (21 2022)
EU Commission expects expansion of EU sunflower area
The EU Commission anticipates a significant increase in area for the 2022 harvest to a potential new record. The main reason is the expected expansion in production area in the most important sunflower-producing countries in the EU.
According to the EU Commission's forecast, the EU sunflower area for harvest in 2022 amounts to around 4.7 million hectares. This would translate to a 199,000 million hectare rise over the previous year. It would just exceed the 2013 peak of 4.6 million hectares. In view of an unclear situation for sowing and growing sunflowers in Ukraine due to the continued war, this is an important signal for the market supply of European oil mills.
Romania remains the biggest producer in the European Union in terms of area. The country expects an increase of 56,000 hectares to around 1.3 million hectares. It is followed by Bulgaria in second place with a currently projected area of 875,000 hectares. In other words, the hectarage is seen to expand 4.4 per cent. According to the latest information published by the EU Commission, France will probably also record a 4.4 per cent rise in area to 729,000 hectares. The sunflower hectarage in Hungary is expected to increase 29,000 hectares or 4.5 per cent on the previous year to 680,000 hectares.
In Spain, sunflower production is also forecast to expand 4.5 per cent compared to the previous year to 654,000 hectares. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), Germany is expecting a larger increase – though at a low level. The area under sunflowers will probably expand 5.3 per cent to 40,000 hectares.
In its outlook for 2022, the EU Commission has forecast yields at an overall average of 23.8 decitonnes per hectare. This translates to an almost 2 per cent rise year-on-year. The highest per-hectare yields are expected to be reached in Hungary. At presumably 29.7 decitonnes per hectare, Hungarian yields could exceed the previous year's level by more than 14 per cent.
Chart of the week (20 2022)
EU rapeseed crop 2022 projected at five-year high
Despite previously low rainfall in some regions, the EU Commission expects the German and French rapeseed harvests to be larger than the previous year.
According to recent information published by the EU Commission, the EU rapeseed harvest in 2022 will likely exceed the previous year's by just under 8 per cent. It is currently projected at 18.30 million tonnes. In fact, it would be the largest harvest since 2017. The main factor for the presumably larger harvests in the most important rapeseed producing EU countries is the 7.5 per cent expansion in production area compared to the previous year to 5.7 million hectares. At this point in time, harvest estimates are naturally still vague, because the harvest result will be determined by weather conditions in the coming weeks.
There has been a lack of rain, especially in the north and east of Germany. However, pest pressure has been low due to persistently cool temperatures. As a result, most winter-planted crops are nevertheless in good condition all across Germany. The EU Commission expects the German rapeseed harvest to reach 3.97 million tonnes. This would translate to a 13 per cent rise year-on-year. France is also expected to see a harvest increase around of 16 per cent to 3.83 million tonnes of rapeseed compared to 2021, despite frosts and lack of rain. By contrast, according to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), Poland, the third most important rapeseed producer within the European Union, is likely to harvest just under 5 per cent less, around 3.04 million tonnes.
For the Czech Republic, Romania, Hungary, Lithuania and Denmark, the EU Commission expects an expansion in area planted, which supports the estimate of the total harvest.
Chart of the week (19 2022)
Use of oilseed meal in compound feeds declined
The use of oilseed meals from rapeseed and soybeans in feed production has dwindled over the past five years.
The use of oilseed meals in compound feeds has declined continuously over the past five years. In the first nine months of the 2017/18 marketing year, it amounted to 4.62 million tonnes. By 2021/22, the figure was down around 11 per cent to 4.11 million tonnes. Soy meal processing decreased just over 9 per cent to 1.78 million tonnes within five years. The same applies to the use of rapeseed meal, which also fell a good 9 per cent to 1.85 million tonnes. By contrast, the shares the meals had in total processing only changed marginally. Whereas the share of soybean meal rose from 42 to 43 per cent in the past four years, that of rapeseed meal increased from 44 to 45 per cent.
According to information published by Agrarmarkt-Informationsgesellschaft (mbH), most soybean meal used in feed production is GM soybean meal imported from non-EU countries, especially Argentina, the US or Brazil. It is mainly used in poultry and pig feeding stuff. The reason for the development of demand for GM-free rapeseed meal is the “without GM” label dairies introduced for their products and the cost-benefit ratio of the feed value of rapeseed for ruminants.
The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has pointed out the many years of projects the association has successfully promoted to optimise the use of domestic rapeseed meal in dairy cow feeding, as well as for pigs and poultry. These projects are the basis of UFOP's 10 +10 strategy which aims at improving supply with vegetable protein for animal feeds from domestic crop production. In future, such protein is to be increasingly used also in the human diet.
According to UFOP, another aim of the strategy is to expedite the exploitation of the potential for growing grain legumes to expand the crop rotation systems, with positive effects for biodiversity, soil quality and the associated added-value potential in resilience-oriented arable farming. The UFOP has urged that the arable farming strategy of the German Ministry of Agriculture and the leading farms that have been won for this purpose should take this approach to crop rotation into account as a demonstration for farmers and the public. This would fundamentally enhance the visibility of the protein crop strategy to the public, also with regard to the ecosystem service that was especially highlighted in a study conducted by the University of Hohenheim last year. The ecosystem service will also be a topic at the UFOP Perspektivforum 2022 which will be held in Soest on 22 September 2022 in cooperation with the South Westphalia University of Applied Sciences.
Chart of the week (18 2022)
European 2022/23 oilseed production expected marginally above previous year
EU oilseed production is likely to exceed the previous year's level by only 0.4 per cent in the current crop year, although the oilseed area is expected to rise 5 per cent. The reason is prospective lower yields due to constraints on means of production.
According to Agrarmarkt Informations-Gesellschaft (mbH), the Russian invasion of Ukraine has led to massive volatility in the oilseed market. Especially, the additional sharp rise in prices for means of production such as energy, fertilisers and crop protection products have been exacerbating the already tense situation. The current forecasts for the 2022/23 crop year should therefore be viewed with some reservation. Production will naturally also depend on future weather conditions. Sowing and growing conditions have previously been favourable for all oilseed crops until well into spring.
According to information published by the USDA Foreign Agricultural Service (FAS), the EU oilseed area in 2022/23, which is currently forecast at 11.67 million hectares, will be just under than 5 per cent larger than the previous year, whereas the increase in output is seen to be small. The FAS has forecast production in the coming crop year at around 31.07 million tonnes. However, this would only be up 0.4 per cent on the 2021/22 season. The main reason for the marginal increase is seen to be a prospective sharp drop in yields. Especially, average sunflower yields are expected to fall significantly short of the previous year's record due to the shortage in means of production such as energy, fertilisers and crop protection products. The currently high costs for means of production are contrasted by attractive producer prices and a high value in crop rotation. In some regions, this could lead to an expansion in soybean production.
Chart of the week (17 2022)
Rapeseed prices reached unprecedented heights
Prices for both rapeseed and soybeans have been flying high since the beginning of the year. Rapeseed recently closed in the four-digit range for the first time, while soybeans also hit a record high.
Paris futures market quotations for rapeseed have been climbing virtually unchecked for several months. The main reason for the strong price surge over the past few weeks is the crisis in the Black Sea region which was sparked by the Russian invasion in February 2022. Reports about the war in Eastern Europe fuelled prices at the international futures markets every minute at a time when prices were rising anyway due to tight supply to the market. Shortages in supply due to the absence of contractual delivery volumes from Ukrainian ports of export are now having a bearing on the entire global market. Concerns about global supply bottlenecks have also led to export restrictions or even bans, like the one the Indonesian government imposed on 28 April 2022. This situation caused rapeseed prices at the Paris stock exchange to explode. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), price fluctuations of up to EUR 68 per tonne in one day were the order of the day in March 2022. Currently, stock exchange prices are driven by snow and cold spells in Canada, where rapeseed sowings should be underway. Prices exceeded the level of EUR 1,000 per tonne for the first time. More specifically, the May 2022 nearby closed at EUR 1,064.50 per tonne on 21 April 2022. The close compares to EUR 561.75 per tonne at the same time a year earlier and as little as EUR 366.75 per tonne in April 2020. This means that stock exchange prices almost tripled within two years.
Soybean prices in Chicago have been rising since the beginning of the calendar year 2022. The focus in the soybean market has been on growing and harvesting conditions in South America and the US as well as brisk demand. Lack of rain diminished the yield potential of the current soybean crop in Brazil noticeably. Argentina is also likely to bring in a considerably smaller harvest than previously expected because of poor growing conditions. This drove prices at the CBOT to the equivalent of EUR 590 per tonne on 21 April 2022, which was not only close to the level of EUR 600 per tonne, but also a new record high.
Chart of the week (16 2022)
Global rapeseed supply/demand balance with marginal adjustments
The USDA currently estimates global rapeseed production for the running crop year 2021/2022 at 71.18 million tonnes, up 60,000 tonnes from the previous month's forecast. According to investigations conducted by the Agrarmarkt Informations-Gesellschaft (mbH), this would only be down 2.43 million tonnes on the previous crop year. In the European Union in particular, rapeseed output is likely to be larger than previously expected.
The USDA also revised 2021/22 global rapeseed consumption upward in its latest monthly report. At 72.99 million tonnes, consumption is seen to be 449,000 tonnes larger than forecast in March. In other words, consumption in the running crop year will presumably fall 1.14 million tonnes short of the previous year's level. The EU-27 is seen to consume 16.35 million tonnes, around 100,000 tonnes more than previously expected. The USDA anticipates even China's demand to rise.
In view of the increase in consumption, 2021/22 ending stocks are likely to decline. According to the USDA's April forecast, they will amount to 4.32 million tonnes. This is 130,000 tonnes lower than the previous month's forecast and clearly down on the previous year's figure of 5.97 million tonnes. Ending stocks in China in particular are seen to shrink significantly due to increased consumption. An expected rise in ending stocks in the United Arabian Emirates can only partially offset the decline.
By contrast, 2021/22 world trade in rapeseed is seen at 13.75 million tonnes, up around 19,000 tonnes from the previous month's forecast. Nevertheless, this would translate to a 4.24 million tonne decline over the previous crop year. As a consequence, the UK, Kazakhstan and Paraguay will likely supply somewhat more than previously expected. The USDA sees a significant drop in import demand in the European Union. The USDA forecast of Ukraine's 2021/22 exports is unchanged from the previous month at 2.7 million tonnes, which would be up 304,000 tonnes on the previous year's volume. Considering the bombed ports and suspension of shipments by sea, actual figures will likely be considerably lower than forecast. The figures quoted above should therefore be viewed with some reservation.
Chart of the week (15 2022)
Vegetable oil prices reached all-time high
The generally tense supply situation in the international oilseed market and historic record levels in the futures markets have fuelled prices of the major vegetable oils in the German market.
Vegetable oil prices in March reached their highest level on record since Agrarmarkt Informations-Gesellschaft (mbH) started recording in 1995. They were fuelled by the war in Eastern Europe. The absence of deliveries of sunflower oil from the Black Sea region fanned concerns about a shortage of global supply. As a result, the war between Russia and Ukraine, the two top suppliers of sunflower oil to the global market, caused prices to skyrocket. After all, Ukraine accounts for around 50 per cent of global exports, followed by Russia with just less than 30 per cent.
Potential buyers now have to look for alternatives, which has led to a massive rise in demand for the remaining vegetable oils. Mid-March asking prices for soybean oil were at EUR 1,880 per tonne fob German mill, which was up around 85 per cent on the same time a year earlier. The main reason for the strong price increase was concerns over adequate feedstock supply, along with the crisis in Eastern Europe. Drought and extreme heat in the South American soy producing regions limited the yield potential, sending asking prices soaring.
Prices in the rapeseed oil market also escalated nearly unabated in March. Tight supply of feedstock, historic record levels in the futures markets and spiking demand caused asking prices to explode. This was also reflected in premiums of up to EUR 288 per tonne for rapeseed oil raffinate. More specifically, prices of EUR 2,170 per tonne fob German mill were reported for prompt batches at the end of March. This was more than twice the amount asked the same time a year earlier. Given the high volatility of the markets, the value could not be maintained at that level.
Asking prices for palm oil also rocketed as a result of the Russian invasion in Ukraine. The lack of vegetable oil shipments from the Black Sea region boosted the popularity of the oil and fuelled prices. At the beginning of March, asking prices were up 95 per cent on the same time a year earlier at the equivalent of EUR 1,759 per tonne CIF Rotterdam. Again, this level could not be maintained. The decline was triggered by an expansion of Malaysian supply.
The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) assumes that farmers in Germany and the EU will factor these price advantages in when preparing their planting schedules. The association has pointed out, however, that the significant increase in costs for transport fuels and fertilisers will also be born in mind when calculating the crop rotation. On the demand side, signs are very clear with a view to the development of wheat prices. According to the UFOP, with a processing capacity of more than 9 million tonnes, German oil mills will heavily rely on German and European rapeseed in the coming crop year to satisfy demand for rapeseed oil and rapeseed meal for animal feeding purposes.
Chart of the week (14 2022)
International Grains Council (IGC) expects significant decline in sunflower area in the 2022/23 season
According to recent information published by the International Grains Council (IGC), the global acreage of sunflowers is set to shrink 7.2 per cent in 2022/23. Ukraine, in particular, is likely to see a significant decline in acreage as a result of the war.
The IGC sees the area planted to sunflowers in the 2022/23 marketing year at 26.4 million hectares. This would be a sharp decline of 2 million hectares or 7.2 per cent. The main reason given for the significant decrease is the presumed lack of sowings on a large part of the crop land in the wake of the war in Ukraine. The IGC estimates the area sown with sunflowers in Ukraine at only 4.5 million hectares. According to Agrarmarkt Informations-Gesellschaft (mbH), this would be 32.4 per cent less than in the current sunflower season. However, this acreage forecast is subject to considerable uncertainty, because due to the ongoing fighting it is uncertain which areas of land can be fertilised, maintained and eventually harvested.
On the other hand, Russia is expected to remain the world's largest producer of sunflowers in the 2022/23 crop year, with an unchanged 9.6 million hectares under sunflowers. The IGC projects the 2022/23 sunflower area in the EU-27 at 4.7 million hectares, which would be up around 5.1 per cent on the current crop year. The presumed increase in area is seen to be driven by the historically high price level and foreseeable limited supply from the Black Sea region.
Chart of the week (13 2022)
International Grains Council (IGC) cut soybean supply & demand significantly
In anticipation of large declines in yield in South America, the International Grains Council (IGC) lowered its forecast of global soybean production. Consumption, ending stocks and world trade were also forecast down.
The International Grains Council (IGC) lowered its estimate of global soybean production in the current crop year significantly in its latest monthly report. Production is expected at 350 million tonnes, which is down just over 3 million tonnes from the previous month's estimate and just less than 19 million tonnes from the previous year's volume. The main reason for the cut was lower harvest outlooks for Argentina and Brazil. which will considerably reduce the availability. Continued hot and dry growing conditions led the IGC to make this adjustment, although harvests in the northern hemisphere were abundant, with the US recording a record crop.
In the light of the tight supply situation the IGC also lowered the forecast of global soybean consumption. Consumption in the current crop year is projected at 362 million tonnes. This would translate to a 5 million tonne decline on the previous crop year. Some countries, first and foremost China and the US, are expected to see a slight increase in consumption which however is seen to be outweighed by a potential decrease in South America. The demand forecast for China does not yet take into account the potential implications of the corona lockdown recently imposed on Shanghai, a metropolis with a population of 26 million people.
In conjunction with its reduced harvest estimate, the IGC also lowered its outlook for global ending stocks 2021/22. At 42 million tonnes, the forecast is down just over 1 million tonnes from February. Compared to the previous crop year, this would translate to a decline of just under 22 per cent or 12 million tonnes. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the decrease is largely due to a sharp drop in stocks in Argentina and Brazil.
Chart of the week (12 2022)
Private households account for 2 per cent of total German rapeseed oil consumption
UFOP: no need to panic buy and hoard edible oil.
German private households bought around 220,000 tonnes of edible oil in 2021. Their preference was for rapeseed oil, with a market share of 37 per cent, followed by sunflower oil, 30 per cent, and olive oil, just less than 19 per cent. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), private households purchased just less than 82,000 tonnes of bottled rapeseed oil in 2021. This was just about 10 per cent of total vegetable oil produced for food purposes and only 2 per cent of total rapeseed oil production.
With war raging in Ukraine and the particular importance the country has to the global supply of sunflower oil, panic purchases are emptying retail shop shelves. The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has stressed that there is no reason to panic because people can switch to edible rapeseed oil, which is of at least the same quality and can be used in hot or cold recipes. The new supply of rapeseed oil was already sown in the past autumn and is now growing on approximately 1 million hectares of land in Germany alone as temperatures are rising. In the EU-27, rapeseed is grown on approximately 6 million hectares. According to the UFOP, a total harvest of approximately 18 million tonnes of rapeseed would yield around 7.2 million tonnes of rapeseed oil.
At the same time, around 10.8 million tonnes of rapeseed meal for feeding would be obtained in rapeseed processing, replacing the corresponding volume of soy imports for animal feeding. Rapeseed meal has replaced soybean meal in dairy cow feeds, the UFOP has underlined, also with a view to the critical debate currently re-emerging on the use of cultivated biomass in biofuels.
The association has emphasised that supply of edible rapeseed oil is fundamentally secure and well beyond demand, adding that panic purchases emptying shop shelves and causing food retailers to introduce rationing are completely unnecessary.
According to the German Federal Office for Agriculture and Food (BLE), German oil mills produced just over 4.7 million tonnes of vegetable oil in 2021, including just over 4 million tonnes of rapeseed oil. This was around 234,000 tonnes more than the previous year. About 839,000 tonnes of the rapeseed oil produced went into the production of food (edible oil, mayonnaise etc.). Rapeseed oil was also used to produce animal feedstuff, as well as in the oleochemical industry and energy sector.
Chart of the week (11 2022)
Ukraine is the top supplier of rapeseed to the EU
The absence of deliveries from the Black Sea region is expected to severely exacerbate the global scarcity of available rapeseed. The running crop year is characterised by tight supply already.
The war in Ukraine is having an increasing impact on world trade, as Ukraine is one of the largest suppliers of rapeseed, along with Canada and Australia. The war will significantly affect global rapeseed supply, which is characterised by tight availability even now. Rapeseed imports to the European Union in the 2019/20 season totalled 6 million tonnes. Of this quantity, 45 per cent (around 2.7 million tonnes) came from Ukraine. According to information published by Eurostat, in the past crop year the share of imports fell to 31 per cent (2 million tonnes). This was virtually at the same level as imports from Canada, which accounted for around 32 per cent of European imports.
According to information published by the European Commission, EU-27 rapeseed imports in the current crop year until the end of February 2022 amounted to 3.23 million tonnes. The by far largest share of this quantity – 50 per cent or around 1.6 million tonnes – was sourced in Ukraine. Canada delivered only 0.5 million tonnes due to significant harvest losses in 2021/22. Consequently, the country only accounted for 16 per cent of EU rapeseed imports. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), Australia ranked second with a 27 per cent share of imports in the current season. If imports from Ukraine were to stop completely and in the long term due to blockaded ports, the supply situation would likely tighten significantly, both within the EU-27 and globally. Although Australian farmers brought in a larger harvest (5.5 million tonnes) than they did in the 2020/21 season, the lack of Ukrainian exports could not be fully offset if shipments were to be stopped altogether.
The UFOP has expressed fears that the supply situation will remain the same in the autumn, if no or little field work can be done in Ukraine in spring. This gap in supplies would have to be offset by an expansion of rapeseed area in Canada – producing good yields again. The association has emphasised that there is currently no way to predict supply volumes in the autumn. However, the high prices should incentivise producers to expand the rapeseed area in compliance with crop rotation restrictions when sowing in the autumn of 2022.
Chart of the week (10 2022)
Ukraine currently accounts for 86 per cent of European sunflower oil imports
The by far largest supplier of sunflower oil to the EU-27 is Ukraine. Bombed and blockaded ports, an export freeze and failure to make sowings for this year's harvest are likely to cut supply in the current crop year noticeably.
In view of the war in Eastern Europe and the absence of shipments from the Black Sea region, the implications for the supply situation within the EU-27 are becoming increasingly clearer. Ukraine is the largest supplier of sunflower oil to the European Union. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), imports in the crop year 2020/21 totalled around 1.7 million tonnes, of which 1.5 million tonnes, around 88 per cent, came from Ukraine. Although the Ukraine's share in EU imports was lower in the 2019/20 season, the country supplied 2 million tonnes more then than it did in the past season.
In the current crop year, the EU-27 imported a total of around 1.27 million tonnes of sunflower oil until the end of February. About 1.09 million tonnes came from Ukraine, which translates to a market share of 86 per cent. Ukraine was followed by Moldova, Bosnia and Herzegovina and the UK with a 7 per cent market share each. The UFOP has pointed out that if imports from Ukraine were to stop completely and in the medium term due to the export freeze, the European Union would face a serious supply problem.
Against this background, the UFOP has welcomed the announcements following last week's informal Agriculture Council: On the one hand, consideration is to be given to allowing the cultivation of protein crops on set-aside land. On the other hand, the "Farm to Fork" strategy is also to be reviewed with a view to its impact on the EU's security of supply. After all, the security of supply of agricultural feedstock starts in the field. Consequently, the "Farm to Fork" strategy should be geared to sustainable intensification instead of extensification of agricultural production. The association expects that farmers will adjust their summer crop sowing schedules, should additional land be released for crop production. At the same time, the UFOP has warned against unreasonably high expectations from such production, because crop rotation and suitability for cultivation involve tight constraints.
In view of collapsing supply chains, the UFOP has generally urged that agricultural policy place a stronger focus on the resilience of these chains. However, stakeholders of agriculture themselves are challenged to provide meaning to the term supply chain in the sense of fulfilling a binding function as contributors to the "Farm to Fork" strategy, for example by offering production and delivery contracts at an early stage. UFOP has called for soothing any unfounded supply fears of the public, which fears have also been triggered by significant increases in consumer prices. According to the association, there is no risk of supply bottlenecks like those seen at the beginning of the pandemic.
The UFOP has suggested that policymakers, together with representatives from the agricultural industry, take stock of the supply situation and, in this context, also properly assess the price increases in the food trade. The association believes that the increases are mainly due to the massive surge in energy prices. Further increases in energy prices must be expected in the coming years due to the continuing rise in carbon pricing. These prospects should be clearly communicated to consumers.
Chart of the week (09 2022)
Foreign trade in biodiesel declines
Compared to the record levels shown in the quota year 2020, foreign trade in biodiesel declined only slightly in 2021. In both years, the export surplus was around 1 million tonnes. According to the Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP), increases in exports were not to be expected in 2020, because the cap on greenhouse gas emission was raised from 4 per cent to 6 per cent that obligation year and the transfer of quotas from previous years was not possible.
The demand gap to meet the quota on GHG emission was bridged by importing approximately 1.04 million tonnes of hydrogenated vegetable oil (HVO) in 2020, according to the Federal Agency for Agriculture and Food (BLE) report published in December 2021. The UFOP has demanded that this fuel alternative, which is gaining in importance with regard to additional uses, be listed transparently in official statistics. The association has pointed out that the fuels are different and that each is covered by its own specific fuel standard. The UFOP has urged that all biofuels and in future also all synthetic fuels (e-fuels) be listed – similar to the regulation requirements governing fossil fuels.
The Netherlands remain the by far most important trading partner, although in some cases volumes declined sharply on the previous year. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), larger volumes also came from Belgium, Poland, France and Malaysia. Whereas France delivered almost as much as a year earlier, imports from other countries dropped significantly. Imports from Malaysia virtually collapsed, nosediving 54 per cent.
At the same time, Germany delivered around 846,000 tonnes to the Netherlands in 2021, which was 18 per cent less year-on-year. Exports to Poland, the US, Austria and Sweden also decreased. Only Belgium – with 354,000 tonnes the number two of the top five recipient countries – imported 3 per cent more biodiesel from Germany than the previous year.
Chart of the week (08 2022)
More domestic rapeseed processed
The share of imported rapeseed in rapeseed processing by German oil mills declined in the first half of the 2021/22 season. The share of domestic batches increased correspondingly.
According to information published by the German Federal Office for Agriculture and Food (BLE), traders at the co-op and wholesale level in Germany by the end of December 2021 had taken delivery of around 1.2 million tonnes of rapeseed. This was up 116,500 tonnes on the same period a year earlier. On the other hand, in the first half of the marketing year 2021/22, rapeseed processed by German oil mills amounted to around 4.7 million tonnes. This was down around 1.4 per cent on the period July to December 2020. The amounts of rapeseed oil and meal obtained were correspondingly smaller.
Whereas German oil mills processed increasingly less German rapeseed in recent years, the share rose over the first five months of the current crop year. According to calculations made by Agrarmarkt Informations-Gesellschaft (mbH), 47 per cent, or just less than half, came from Germany, which translates to a 43 per cent increase. In other words, the ratio of domestic and imported rapeseed was nearly balanced for the first time in five years. Until 2016/17, with harvests exceeding 4.3 million tonnes per year, more than half of the rapeseed supplied to German oil mills was domestic.
The UFOP has underlined the importance of and need for imports to utilize the capacities of the oil mills, which processed approximately 9.5 million tonnes of seed in 2021. The association is therefore watching the situation of conflict in Ukraine with concern, as the country is one of the most important suppliers to Germany, not only of rapeseed. Against this background and in view of the continued high level of producer prices, the UFOP has recommended that producers secure these prices in commodities futures and fully use the farms' potential for rapeseed production when sowing whilst taking into account the requirements of crop rotation.
Chart of the week (07 2022)
Increased rapeseed production reduces import demand
EU-27 rapeseed production in 2021/22 exceeded the previous year's output. Consumption is estimated lower, leading to reduced import demand.
According to information published by the EU Commission, the rapeseed harvest in the EU-27 was slightly larger in 2021 than in 2019. It is pegged at 17 million tonnes, which translates to a rise of just less than 340,000 tonnes compared to 2020. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the climb is a result of harvest increases, especially in Romania. Bulgaria, Denmark, Lithuania and Poland also recorded a rise. The harvest increases more than offset production declines in other member states. Nevertheless, the result is once again below average.
Demand from oil mills in the EU-27 in 2021/22 is estimated at 21.8 million tonnes, which translates to a decline of 6.3 per cent year-on-year. The slightly higher output and lower demand will likely cause the gap between production and processing to narrow somewhat in 2021/22. A year earlier, European production covered just less than 72 per cent of EU processing, but there were significant differences between member states. In 2021/22, EU rapeseed will presumably cover about 78 per cent. For this reason, the EU Commission expects that compared to the previous crop year, less rapeseed will have to be purchased from third countries. Imports are estimated at 4.9 million tonnes, which would be a 15 per cent drop. EU ending stocks are likely to remain unchanged from the previous year at the low level of 0.5 million tonnes.
Chart of the week (06 2022)
Soybean record crop in Brazil presumably smaller than expected
Brazil and Argentina are set to maintain their shares in the global soybean market this crop year. The soybean harvests both in Argentina and in Brazil are expected to be larger, although poor growing conditions dampen prospects of a bumper crop.
Brazil, the US and Argentina are the main soybean producing countries, collectively accounting for 80 per cent of global soybean output. India follows a long way behind with a share of 12 per cent. According to a USDA report, Brazil is projected to harvest a record soybean crop of 139 million tonnes in the current crop year, which would be up around 1 million tonnes from the previous year. Locally extreme growing conditions with dryness on the one hand and excessive rain on the other hand dampen prospects of a bumper crop which the USDA December outlook put at 144 million tonnes. Brazil is consolidating its number one position ahead of the US based on a 1.5 million hectare expansion in area planted. In the US, the soybean harvest was already complete at the end of the year 2021. The harvest amounted to around 120.7 million tonnes. This translates to a rise of around 6 million tonnes year-on-year.
In Argentina, the world's third largest producer, the harvest is expected to rise slightly to 46.5 million tonnes (from 46.2 million tonnes the previous year), following two years of decline. According to the latest USDA estimate, India also anticipates an increase in harvest of around 1.5 million tonnes year-on-year to 11.9 million tonnes.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has pointed out that, according to Agrarmarkt Informations-Gesellschaft (AMI), the increase in soy output in Brazil is based on a 1.5 million hectare expansion in production area. The association has said that such expansion should be viewed critically because it exacerbates the increasing debate about the transparency needed for deforestation-free procurement. Also, production of biofuel obtained from soybean oil will be affected by the future regulation that soybean oil-based biofuel, along with palm oil-based biofuel, can no longer be counted towards national quota obligations. The UFOP has noted that the French and Dutch governments have already excluded soybean oil from being counted towards quota obligations without any regulation having to be implemented by the EU.
Chart of the week (05 2022)
International Grains Council sees global rapeseed cultivation for the 2022 harvest at a record high
In its second projection of global rapeseed cultivation for the 2022/23 marketing season, the International Grains Council (IGC) has raised its estimate to a record level. The reason is considerable price increases and buoyant demand in the current crop year.
In view of the historically high price level and rising demand, the IGC expects the global rapeseed area to expand to a record of 40 million hectares for the 2022/23 marketing season. This would translate to a more than 2 per cent rise on the running crop year.
The IGC sees the largest increases in acreage in key rapeseed producing countries, such as Canada and the EU-27. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), around 5.6 million hectares of rapeseed could be available for harvest in the European Union in 2022, mainly due to expansions in France and Germany. Nevertheless, even taking into account the area under rapeseed cultivation in the UK, this would be down 1.0 million hectares on 2017, a year when the European rapeseed acreage hit a record at approximately 6.8 million hectares.
From the perspective of the UFOP, there is much to suggest that the IGC estimate is more on the conservative side, because rapeseed producers' marketing conditions regarding the 2022 harvests and sowings are set to remain attractive. The UFOP has pointed out that not only in Germany, but also in other EU member states, the option of counting palm oil-based biofuels (biodiesel/HVO) towards national quota obligations will end in 2023. The association expects that biofuel producers will have to look for appropriate alternatives before long. According to the UFOP, sustainable rapeseed oil would be the perfect choice. The association has drawn attention to the fact that feedstock procurement already starts with the sowing of seed. Because of this, appropriate initiatives for planning crop rotation for the 2023 harvest should be provided already at the time of the 2022 harvest.
The declines in yield in the 2021/22 season and the resulting significantly lower output are seen as having triggered the increase in international rapeseed prices. The IGC also anticipates a 4 per cent expansion in canola area in Canada to 9.4 million hectares. Rapeseed production in Ukraine is seen to remain unchanged from the IGC November estimate at 1.1 million hectares, which would be up 100,000 hectares on the previous season.
Chart of the week (04 2022)
Global soybean supply and demand with significant adjustments
The continued dryness in South America led the USDA to revise the forecast of global soybean production considerably downward. Expectations for world trade, processing and season-ending stocks were adjusted accordingly.
In its latest report, the USDA significantly lowered its forecast of global soybean supply and demand. The biggest adjustment was in global production, which was forecast down 9.22 million tonnes to 372.56 million tonnes. In other words, the running crop year will presumably still exceed the 2020/21 season by 1.7 per cent. The main reason for the reduction was anticipated harvest losses as a consequence of the continued dryness in South America. More specifically, production in Brazil, the world's biggest soybean producer, was lowered 5 million tonnes to 139 million tonnes. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the soybean harvest in Argentina is also likely to be smaller at 46.5 million tonnes (down 3 million tonnes). The same applies to Paraguay, where the harvest is expected at 8.5 million tonnes, around 1.5 million tonnes down from the December estimate.
The forecast of global soybean processing was also forecast down 2.02 million tonnes to 325.72 million tonnes. Nevertheless, this would translate to a 10.15 million tonne rise over the previous year. The downward revision was based on lower expectations for Brazil, Argentina, Egypt and Paraguay. As a consequence of the decline in global output, global stocks are likely to decrease in the 2021/22 marketing year. The current estimate is for 95.20 million tonnes, down around 6.8 million tonnes from the December forecast. This translates to an expected decline of 4.7 percentage points over the 2020/21 season. The main reason for the revision was smaller ending stocks in Brazil and Argentina due to lower harvest expectations.
The forecast of world trade was also revised downward in the latest USDA report. At 170.74 million tonnes, trade in the current crop year is seen at around 1.6 million tonnes below the previous month's level and around 6 million tonnes above the level recorded for the 2020/21 season. The outlook is based on lower export expectations for Argentina and Paraguay. China is set to remain the world's primary soybean recipient with an unchanged import volume of 100 million tonnes. The USDA sees demand in the EU-27, Argentina, Egypt, Bangladesh and Turkey lower than projected in the December outlook.
Chart of the week (03 2022)
Only 7 percent of global crops is used for biofuels production
In 2020, 1.4 milliards ha of crops such as grain, oilseeds, protein, sugar and fibre plants, fruits, vegetables, nuts and others were grown worldwide. Most of this produce is used as food. Only around 7 per cent go into biofuels production.
Biofuel production is mostly located in countries where there is already a surplus of feedstock (especially maize, soy and palm oil) and legally prescribed blending obligations. If the surplus were not used to produce biofuels, it would have to be placed on the global market, where it would weigh heavily on feedstock prices. The use in biofuel production reduces the production overhang, generates extra value added and reduces the need for foreign currency for imports of crude or fossil fuels. This is primarily a problem in poorer countries.
Another advantage is the amount of high-quality protein feed that is generated in biofuel production, demand for which is steadily increasing. The amount and quality of these protein feeds have a strong influence on feedstock prices. Consequently, they also determine the amount of land dedicated to growing the feedstocks. In other words, biofuels are by no means the price drivers in the commodities markets. If necessary, the feedstocks grown for biofuel production are primarily available for food supply. In the case of politically motivated extensification, the EU Commission is currently pursuing with its reduction strategy for fertilizers and plant protection products as part of the "Green Deal", this option for "buffering" food demand would be omitted.
Chart of the week (02 2022)
FAO vegetable oil price index 2021 hit new annual high
The FAO price indices of vegetable oil and cereals in November 2021 reached an all-time high at 185 and 141 points, respectively. In December, the indices declined slightly.
The December 2021 FAO vegetable oil price index was at on average 178.5 points, around 6.1 points shy of the previous months peak. This translates to a decrease of 3.3 percentage points. More specifically, palm oil suffered a sharp slump in value compared to the previous month. The price drop was first and foremost due to dampened global demand for imports due to concerns over the potential impact of the rebound of Covid-19. Prices for sunflower oil also declined. By contrast, the price levels of soybean oil and rapeseed oil remained the same. Asking prices received support from brisk import demand, especially from India, and continued scarce global supply.
Looking at the entire year 2021, the FAO vegetable oil price index was at on average 164.8 points, which was up 65.4 points from the previous year's level. This translates to a 65.8 per cent rise to a new annual high.
The FAO cereal price index in December dipped 0.9 points, or 0.6 per cent, to 140 points. Whereas export prices for wheat fell as a result of improved global supply and dwindling demand, prices for maize climbed. The latter received support from continued concerns over harvest losses as a consequence of dry weather in Brazil. The cereal price index for 2021 was established at on average 131.2 points, which translates to an increase of 28 points, or 27.2 percent, over the previous year. In other words, the index reached the highest level since 2012.
The FAO cereal price index is based on official daily stock exchange and trade prices for wheat, barley, maize, sorghum and rice, weighted according to their average shares in world trade.
Chart of the week (01 2022)
US shipped less soybeans to the EU-27
Soybean is the most important oilseed crop imported to the European Union, ahead of rapeseed. Soybean imports over the first five months of the running crop year amounted to around 5.8 million tonnes, just about 1 million tonnes less year-on-year. There were big changes among supplying countries.
Brazil and the US remained the top soybean suppliers to the EU, with volumes clearly shifting towards South America. Brazil delivered around 3.4 million tonnes in the period 1 July to 12 December 2021, one fifth more than over the same period a year earlier. In other words, 59 per cent of imports were sourced in Brazil. By contrast, the US supplied only just 1.6 million tonnes, which was an 840,000 tonne decline year over year. In other words, the US accounted for 27 per cent of EU-27 soybean imports. According to Agrarmarkt Informations-Gesellschaft (mbH) (AMI), one of the reasons for the sharp drop in US shipments is likely to be the damage Hurricane Ida caused to export terminals in the Gulf of Mexico, which severely hampered exports. Canada remained the third most important supplier, exporting 639,300 tonnes, followed by Ukraine with 104,911 tonnes. This translates to a share of 11 per cent and just less than 2 per cent, respectively. Uruguay ranked fifth with 16,530 tonnes.
In this context, the Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has pointed out that the EU Commission at the end of November 2021 presented a proposal to define future requirements for substantiating deforestation-free procurement of soybeans and palm oil, among other produce. With that, the Commission wants to stay abreast of the public debate on feedstock origins and transparency in the entire commodity chain.
The UFOP has underlined that such requirements are not news to the biofuels industry. In fact, appropriate requirements have been in place under the sustainability certification established by law since 2010. The dated evidence that land was used as area of cultivation before January 2008 is a parameter of particular importance. In view of the incipient debate to implement such requirements in Germany, the UFOP has urged that the scope of the documentation requirements for the commodity chain in question should be appropriate and reasonable in terms of practicability and bureaucratic effort and should be along the lines of the sustainability certification in the biofuels industry. “Duplicate evidence“ should be avoided. According to UFOP, it should be noted that a proof of land use is already required both for certified sustainable soybean oil for use in biodiesel production and for importation of such commodity to the EU. The certification is awarded irrespective of the final use of the soybeans and type of processed product. This means that the corresponding amount
of soybean meal is already included in the procedure. The German Federal Office for Agriculture and Food (BLE) has extensive experience in implementing the certification requirements and has also created a database that has attracted international attention.
With regard to fair competition that is necessary in the interests of environmental and climate protection, the UFOP has underlined the fundamental need for regulation. According to information published by AMI, the growth in Brazil's exports is based on the use of additional land that has previously not been located due to a lack of data. The UFOP has admitted that this issue can be resolved thanks to the progress of satellite technology and the Global Risk Assessment Services (GRAS) project funded by the BMEL. However, there is a risk of shift effects if key importing countries such as China do not impose analogous standards for imports. Internationally agreed sustainability standards could then be undermined and processed products would end up on European plates after all. The UFOP has urged that such shift effects and the associated distortion of competition to the detriment of the EU's agricultural sector should be avoided.
Chart of the week (51 2021)
Record year of oilseed production
According to current USDA estimates, global production of oilseeds in the crop year 2021/22 is set to hit a peak of around 627.6 million tonnes, which would be up around 4 per cent year-on-year. After recent expectations of an output of 628 million tonnes, the current forecast is slightly more cautious.
Global processing of oilseeds is also set to rise to a record high of 527.2 million tonnes, according to the most recent USDA outlook. This would be up around 18.3 million tonnes on the crop year 2020/21. Global ending stocks will presumably amount to 114.1 million tonnes, which would exceed the previous year's level by 400,000 tonnes. However, ending stocks are seen to be clearly below the 133.9 million tonne record high recorded in the 2018/19 season. Also, world trade in oilseeds is expected to increase 6 million tonnes to 196 million tonnes.
At 382 million tonnes, the current crop year's soybean harvest is expected to be larger than ever. Global output of sunflower seed is also set to increase on the year, 14 per cent to 57 million tonnes. By contrast, world rapeseed production is seen to decline 4.8 million tonnes to 68.4 million tonnes year-on-year. According to Agrarmarkt Informations-Gesellschaft (mbH), this outlook is based on harvest declines in major rapeseed producing countries, especially Canada. It should be noted that the USDA oilseed estimate also includes peanuts (approximately 51 million tonnes) and cottonseed (approximately 44 million tonnes), among other oilseeds.
The rise in soybean output is due to an expansion in area in the wake of adjustments in crop rotation in North and South America and in South America also to changes in land use (clearing primeval forest). This is why the EU Commission and the German government are working towards deforestation-free procurement of feedstuff. The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has pointed out that with respect to biofuels from cultivated biomass, a compulsory certificate of crop area origin dated 2008 has already been a requirement for recognizing the sustainability certificate in the commodity chain and consequently for accessing the EU market ever since the Renewable Energy Directive (2009/28/EC) was implemented. This certification requirement can basically be applied irrespective of use. The administrative prerequisites, including the database, are in place, at least in Germany. The certification requirements are being tightened under the EU Commission's proposal to amend the Renewable Energy Directive (RED II), which proposal provides, among other things, for the creation of an EU database along the lines of the "Nabisy" database of the Federal Agency for Agriculture and Food (BLE). The BLE has just published the Evaluation and Progress Report 2020, which transparently shows how data were acquired and analysed. This is not least a significant contribution to acceptance of biofuels from cultivated biomass among politicians and the public.
Chart of the week (50 2021)
Rapeseed oil exports reached record level
German exports of rapeseed oil reached a new record, exceeding the level seen in the peak year of 2016/17.
German rapeseed oil exports increased again in the 2020/21 crop year, following a significant decline in 2017/18 and 2018/19. In fact, with total exports of rapeseed oil amounting to 1.3 million tonnes, they even outstripped the peak of 1.2 million tonnes in the 2016/17 marketing year. This translates to a 36 per cent rise over the previous marketing year. The by far largest recipient country of rapeseed oil in 2020/21 was the Netherlands, which acts as a central hub for world trade in agricultural commodities. The country was followed by Belgium, Denmark, France and Norway as the most important destinations for German rapeseed oil. Belgium purchased around 102,600 tonnes from Germany (+ 8 per cent), whereas Denmark imported 57,300 tonnes (- 6 per cent). France received more than it did the past marketing year. The country remained an important market for Germany, with purchases amounting to 54,700 tonnes (+ 10 %). Great Britain, the Czech Republic and Finland also imported significantly more than 2019/20, whereas exports to Poland, Hungary and Austria declined.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has underlined the significance of the European biodiesel industry as the most important recipient of rapeseed oil. The UFOP has ascribed the growth in exports from Germany and import demand from other European states to the low availability of rapeseed and rapeseed oil due to harvest declines throughout Europe. The neighbouring countries also had to meet biofuels mandates to avoid penalties. The association has added that during the winter months of November to April practically only rapeseed oil-based biodiesel can be used for blending to meet winter-grade diesel quality requirements. This genetic edge provided by the fatty acid composition of rapeseed oil entails a sales potential that could only be achieved during this period using hydrotreated vegetable oil (HVO), which is more expensive than rapeseed methyl ester (RME).
The UFOP has recommended that in view of the supply to the market and development of prices the biodiesel industry should consider offering an incentive for farmers to grow sunflowers in 2022 by presenting appropriate forward contracts. The association has pointed out that, along with rapeseed potential, there is also a land and feedstock potential that can be exploited to improve biodiversity and expand crop rotations. In view of the fact that coronavirus-related restrictions can be expected to be maintained or tightened, feedstock supply of used cooking oils and fats is unlikely to increase. The option of counting biofuels based on waste category 1 and 2 animal fats, which will be permitted in Germany for the first time in 2022, will
not change this. The UFOP sees this as just a compensation of export volumes that will be missing
Chart of the week (49 2021)
Top yields of German soybeans
Global soybean production could exceed consumption for the second year running. This could led to a rise in ending stocks.
In its forecast of world soy production, the USDA expects an all-time high of 384 million tonnes. The record estimate is due to the almost 6 million tonne US harvest increase compared to the previous year and positive outlooks for South America (+3 million tonnes for Argentina and +6 million tonnes for Brazil). However, this trend is paralleled by a rise in demand in 2021/22. At 378 million tonnes, the USDA anticipates an increase of 15 million tonnes over the 2020/21 marketing year, mainly based on the consumption forecast for China, which has been raised once again. In China, soybean consumption could increase to just less than 118 million tonnes in 2021/22, which would be up around 6 million tonnes on the previous marketing year. According to Agrarmarkt Informations-Gesellschaft (mbH), this means that China covers almost one third of global demand. It is followed by the US in second place (63 million tonnes), with Brazil (50 million tonnes) and Argentina (49 million tonnes) behind. Soybean consumption in each of these three countries is also set to rise, but less strongly so than in China, by approximately 1-2 million tonnes. In contrast, the EU is expected to see a slight decline in soybean stocks to 17.6 million tonnes.
Despite the strong growth in demand in China, global stocks are set to rise to 104 million tonnes, mainly based on production increases in North and South America.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has pointed out that the rise in soybean output is not just due to increases in yield, but also to expansions in area. The issue of deforestation-free sourcing and greater transparency through labelling is also moving into focus for the new German government. The provisions of the Renewable Energy Directive (2009/28/EC) for biofuels certification, which came into force in 2009, also provide for a dated proof of origin for crop areas. The UFOP has pointed out that these certification requirements are currently being tightened by the implementation of the revised Directive (RED II), including the creation of an EU database as from 2022. The requirement of sustainability certification does not apply unless the products in question are to be credited towards quota obligations. As a consequence, the entire rapeseed area in Germany is certified and, with that, so are all products obtained from it, including rapeseed meal.
The association has explained that the groundwork for a proof of origin has been laid by the EU biofuels policy and could be used as a blueprint also for other crops. The UFOP has emphasised that this approach to creating a proof of sustainability could help support the EU Commission's aim to strengthen added value in the production regions as part of its "Farm to Fork" strategy. This would apply to domestic grain legumes in general. For this reason, the UFOP has called on the new German government to take a holistic view of the biofuels policy and grain legume production and place a focus on domestic protein crops in suitably expanded crop rotations.
Chart of the week (48 2021)
Top yields of German soybeans
According to the German Federal Statistical Office, around 104,000 tonnes of soybeans were harvested in Germany in 2021. This was the largest quantity ever.
After the cold spring had only allowed for a slow start to the growth period, growing conditions were just about optimal in the summer and early autumn, as the amount of rain and heat was sufficient. This led to a boost in soybean yields for the 2021 harvest. Yields reached a record high at presumably 30.3 decitonnes per hectare. Consequently, German farmers harvested a bumper crop of more than 100,000 tonnes in 2021, although the hectarage had barely been increased. This was just over three times more than six years earlier.
German soybean production has grown more than tenfold since 2012 due to a steady expansion in production area. The soybean area for the 2021 harvest amounted to 34,300 hectares, which was up 1.4 per cent year-on-year. Also, yields were higher than average and showed enormous increases compared to the drought year 2020, especially in Eastern Germany. More specifically, in Brandenburg they rose 65 per cent over 2020. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), Baden-Wuerttemberg, Lower Saxony and Hesse also recorded very large increases of 34-48 per cent.
The UFOP regards this positive trend in yields per hectare as evidence of successful breeding of soybeans. Soybeans are an increasingly interesting complementary crop to crop rotations, both in economic and ecological terms. However, in view of climate change and the need to develop climate-resilient crop rotation systems, this trend has to be expedited for all large-grained pulses, especially by providing a boost to push-funding for breeding work. From the perspective of the UFOP, what is needed is a research and investment budget, analogous to that introduced to expand renewable energy. According to the association, there is a need for a sustainable funding environment also for research in crop breeding (similar to that for research in e-mobility) and it should be combined with measures to facilitate market access.
The UFOP expects the German Ministry of Agriculture to move up several gears under the new leadership in order to make an ecological bioeconomy strategy finally visible across the board. In this context, UFOP has drawn attention to the EU Commission's and previous German government's proposals and measures for deforestation-free procurement. The latter starts in the local field, the association has emphasised, making reference to projects initiated and carried out by UFOP in cooperation with scientific and plant breeding experts (https://www.ufop.de/agrar-info/forschu/berichte/ - in German only).
Chart of the week (47 2021)
World harvest of dry peas declined
The drought that hit North America has severely affected the production of dry peas this season. After all, the US is one of the top five producers and exporters, along with Canada.
The International Grains Council (IGC) currently assumes that the global dry pea harvest will amount to 12.6 million tonnes in 2021/22. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), this would translate to a 16 per cent (2.3 million tonne) drop which is mainly due to production decreases in North America. The dry pea harvest in Canada is currently estimated at 2.5 million tonnes, which would be down 45 per cent on the year-earlier level. Continued hot and dry conditions in western production regions at the time of planting and during the growing season resulted in the smallest harvest in almost two decades.
Russia moved to the top of the list of dry pea producers with an output of 2.7 million tonnes, although the harvest was around 1.5 per cent smaller than the previous year. The EU-27 follows in third place with production amounting to 2.2 million tonnes. This translates to a 7 per cent increase over 2020 and is due to an expansion in dry pea area in Germany and France. Also, France harvested outstanding yields that were impossible to achieve in Germany due to poor weather conditions.
The declines in North America cannot even remotely be offset by the 21 per cent, or 100,000 tonne, increase in Ukraine. At 600,000 tonnes, the Ukrainian output was the same level as that of the US as the US harvest slumped 44 per cent due to drought.
In the southern hemisphere, the picture is mixed. Whereas according to the IGC forecast, the upcoming dry pea harvest in Australia is set to fall 15 per cent short of the previous year's figure, to 0.3 million tonnes, Argentina's harvest is seen to grow 16 per cent over 2020, based on a first official estimate of production area and assuming a return to average yields.
In view of the EU Commission's proposal for a regulation on deforestation-free products, the Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has underlined the great potential for growing dry peas and other large-grained pulses, such as field beans, lupines and soybeans. The UFOP has contended that both the EU Commission and the German government have failed to coordinate the funding opportunities that basically exist in a way that would allow the production of protein crops – similarly to that of rapeseed – to develop into a backbone of supply with GM-free protein for food and feed in the EU-27.
The association has acknowledged that the Commission' s proposal is a basically appropriate approach to thwarting the still concerning slash and burn activities with their tremendous impact on climate change. In this context, the UFOP has drawn attention to the results of the UFOP Perspektivforum event held in September 2021 (presentations and video recordings are available for download at www.UFOP.de/forum21) . The results included a substantial need for communication to consumers by means of adequate labelling in order to provide information on feedstock origins and, with that, the ecosystem service of extended rotation systems.
The UFOP expects the new German government to develop an overall approach strategy to create economically self-sustaining prospects for arable farms, the first link in the value chain.
Chart of the week (46 2021)
Global vegetable oil production set to reach new record highs in 2021/22
Global production of vegetable oils continues to increase in the 2021/22 crop year to reach new record highs. An expected decline in rapeseed oil output can be more than offset by production increases in palm, sunflower and soybean oil.
According to the recent USDA outlook, 2021/22 global production of vegetable oils will amount to 214.8 million tonnes. This would be an 8.21 million tonne rise compared to 2020/21. In other words, production will presumably fully cover demand of 211.8 million tonnes also in the current crop year.
According to investigations conducted by the Agrarmarkt Informations-Gesellschaft (mbH), palm oil is set to remain the world's most important vegetable oil in terms of production and consumption, with output estimated at 76.5 million tonnes. This translates to a 3.6 million tonne rise over 2020/21. In other words, palm oil accounts for just less than 36 per cent of total vegetable oil production. Indonesia remains the largest palm oil producer with an output of 44.5 million tonnes, followed by Malaysia with 19.7 million tonnes and Thailand with 3.1 million tonnes.
Production of soybean oil is expected to grow 4 per cent to 61.7 million tonnes based on larger harvests and could hit a new record. China remains the most important producer with production amounting to 17.6 million tonnes, whereas the USA ranks second with 11.6 million tonnes. Production of sunflower oil is expected to climb as much as 14 per cent to 21.8 million tonnes in 2021/22 due to larger harvests in Eastern Europe and the EU-27. On the other hand, the USDA has projected a 6 per cent decline in global rapeseed oil production to 27.4 million tonnes based on inadequate rapeseed supply.
The Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) expects the persistently high prices for sunflower oil to boost the expansion of sunflower area for the 2022 sowing campaign.
Chart of the week (45 2021)
Not a EU sunflowerseed record crop after all
In the EU-27, the 2021 harvest of sunflowerseed was considerably larger than the previous year. It also far exceeded the long-term average. However, the 2017 record level was not topped.
An estimated 10.3 million tonnes of sunflowerseed were produced in the European Community in 2021. This was a 14 per cent rise over the previous year and translates to a 10 per cent increase on the long-term average. The sunflower area was also expanded compared to the previous year, although only just under 1 per cent to 4.5 million hectares, 7 per cent more than the five-year average. The average yield amounted to 23 decitonnes per hectare, which was a 13 per cent growth on the weak previous year. In other words, this year's yield fell just under 0.6 per cent short of the long-term average.
According to investigations conducted by Agrarmarkt-Informationsgesellschaft (mbH), the significant rise in production was especially due to production increases in France, Romania, Bulgaria and Slovakia. With a growth of 0.8 million tonnes to around 3 million tonnes, Romania remains the largest producer of sunflowerseed within the European Community, followed by Bulgaria which produced 1.9 million tonnes. Mostly favourable weather conditions helped farmers bring in larger harvests, after lack of rain during the yield-forming period and torrential rain at harvest time had led to high harvest losses in Bulgaria and Romania the previous year. In contrast, the harvest in Hungary was presumably smaller than the previous year, as drought hampered yield formation during the vulnerable growing period.
Chart of the week (44 2021)
Percentage of biodiesel contained in diesel fuel reached annual high
The percentage of biodiesel contained in diesel fuels rose to 8.3 per cent in August, the highest level in ten months.
In August 2021, 266,710 tonnes of biodiesel were used for blending, which was up 15 per cent on the previous month. Since at the same time, consumption of diesel increased only 2 per cent to 2.9 million tonnes, the incorporation rate rose to 8.3 per cent. Consequently, total consumption of diesel and biodiesel amounted to 3.2 million tonnes in August, which was down 1.6 per cent compared to August 2020. In the period from January to August 2021, consumption of biodiesel totalled 1.6 million tonnes, whereas the incorporation rate averaged 7.3 per cent, comparing to 8.8 per cent in the same period last year.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has pointed out that the standard for diesel fuel, DIN EN 590, places a cap on the percentage of biodiesel at 7 per cent by volume. The blending percentage exceeding this limit is hydrotreated vegetable oil (HVO). The association has contended that these volumes are still not listed by the Federal Office for Economic Affairs and Export (BAFA).
The UFOP estimates biodiesel/HVO demand at approximately 2.5 million tonnes for the calendar year. In other words, sales are seen to decline approximately 0.5 million tonnes on the extreme year 2020. According to European Fuel Quality Directive regulations, EU member states had to reduce emissions by 6 per cent the previous year without being permitted to carry over quotas. This meant they had to meet GHG quota obligations mainly by means of physical material. The carryover option to meet climate protection targets has only been reintroduced in 2021. Another reason for the decline was the continuous decrease in demand for diesel and energy due to the growth of e-mobility and the superior energy efficiency associated with this type of powertrain.
However, the UFOP has underlined that more than 35 million cars will still be powered by combustion engines in 2030, the target year of the European Climate Law and German Climate Change Act (the latter having been toughened just this year, especially as regards the transport sector). The association has explained that in order to meet the GHG quota obligation, which will gradually rise to 25 per cent by 2030, and emission requirements, the world needs any and all options without giving preference to any specific technology and that such options would include certified sustainable greenhouse gas-efficient biofuels from cultivated biomass, residues and wastes. Looking at products that do not need to meet requirements of the same standard, the UFOP has pointed out that proof of sustainability should be the "permit" to access the market and being granted credits towards the cap on GHG emissions.
Chart of the week (43 2021)
EU rapeseed imports fell below year-ago level
This year's rapeseed harvest was larger than that of 2020. For this reason, the EU-27 has needed fewer imports from third countries to date.
The EU-27 imported around 1.3 million tonnes of rapeseed in the first 15 weeks of the 2021/22 season. This was a 43 per cent decline compared to the same period last year and a 75 per cent drop over 2019/20. Such fluctuations not only depend on rapeseed output in the European Union, but also on rapeseed availability on the global market. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the European rapeseed crop will presumably amount to 16.9 million tonnes in the current marketing year. Although this would be just less than 0.8 million tonnes up year-on-year, it would not be sufficient to cover demand. German oil mills alone process more than 9 million tonnes of rapeseed. The EU Commission has estimated additional import demand for 2021/22 at 5.7 million tonnes. This volume would only be around 150,000 tonnes smaller than that recorded in 2020/21.
However, the availability of rapeseed on the global market is severely limited as a result of considerable harvest losses suffered by Canada, the main rapeseed supplier. Consequently, the market has had to rely on Australian rapeseed already at the beginning of the season. Normally, Australia is a guarantor of rapeseed deliveries in the second half of the marketing year. Even the UK, which was still a member of the EU at the same time a year earlier, is now sourcing imports from third countries. Restrained deliveries from the Ukraine have also added to the gap. Although the harvest was larger, rapeseed deliveries from Ukraine were down 37 per cent year-on-year. This shortfall was only insufficiently offset by the larger deliveries from Moldova and Serbia.
Chart of the week (42 2021)
Another increase in EU legume crop
Production of legumes in the EU-27 for the 2021 harvest increased significantly by 10 per cent. The biggest growth was recorded for sweet lupins.
In 2021, EU-27 legume production has grown the third year running. According to the EU Commission's estimate, the total harvest amounted to just less than 6.8 million tonnes. This was up 10 per cent year-on-year, but remained short of the 7 million tonne record harvest of 2017. Of the legume crops listed, sweet lupins saw a particularly big increase in output compared to the previous year. The 2021 harvest was approximately 347,000 tonnes, which translates to a 71 per cent rise on the previous year which saw a sharp decline in sweet lupin area. Consequently, the current harvest is 49 per cent larger than the long-term average. According to Agrarmarkt Informations-Gesellschaft (mbH), the increase is exclusively due to the expansion in area, because yields were lower than a year earlier. The 2021 field bean harvest amounted to 1.3 million tonnes, which was up 2 per cent on 2020. Again, the increase is based entirely on the larger field bean area since yields remained below the previous year's level. Compared to the past five years, an increase of 11 can be identified.
The most important legume crop in the EU-27 is soybean, which accounts for a slightly lower share of around 43 per cent of grain legume production. Farmers harvested around 2.8 million tonnes in 2021, approximately 8 per cent more than the previous year. This is mainly due to a 7 per cent growth in yield, since the soybean area was only marginally expanded. The second most important legume crop in the EU-27 is feed pea. At 2.3 million tonnes, production surged 13 per cent from 2020. The main reason is a 9 per cent expansion in area planted. Yields were up 3 per cent year-on-year. In the long-term comparison, production of feed peas was up 7 percent and that of soybeans 5 per cent.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has said that this development in production confirms the basic upward trend in grain legume production and farmers' interest in opening up new markets and making crop rotation systems more resilient and less risky in view of climate change. Addressing the new German government, the UFOP has underlined its call to make the necessary accompanying steps sufficiently attractive. According to the association, the toolbox is basically in place and all that is needed is a forward-looking bold approach. The UFOP has renewed its call for an adequate premium scheme to promote the production of grain legumes as part of the "Diverse Crop Rotation" ECO scheme that is currently being discussed, as well as demanding adequate funding of the protein crop development strategy. Both issues are important "guidelines" for a future arable farming strategy that deserves the name and is also appreciated by consumers.
The UFOP has drawn attention to its studies on the expansion of crop rotation systems and the specific and monetarily quantifiable contribution grain legumes make towards climate protection. These studies were presented at the “UFOP Perspektivforum” event on 23 September 2021. At a UFOP conference that is to be held on 2 November 2021, the value of the protein components of rapeseed and grain legumes for a healthy, varied and climate-friendly diet and the added-value potential that could be utilised at a regional level will be presented and discussed. For the conference programme, please see here.
With this information, the UFOP has underlined its claim to be a competent contact partner for the coming legislative period.
Chart of the week (41 2021)
Surprisingly high ending stocks beat down US soybean prices
The quarterly report on US soybean stocks published at the end of September took market participants by surprise. As a result, soy prices at the Chicago stock exchange tumbled.
The quarterly USDA stocks report once again caused a stir in the soybean market in October 2021, because market participants had not expected the figures to reach the level they did. The nearby in Chicago fell abruptly to levels not seen since January 2021 in one day.
According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the US had just less than 7 million tonnes of soybeans in storage on 1 September 2021. As expected, this was less that at the same time a year earlier. Market participants had only expected 6.4 million tonnes. The new estimate put pressure on soybean prices. The USDA lowered its forecast for demand for fodder production in the new outlook. Also, shipping delays are to be expected because port facilities in the Gulf of Mexico suffered damage from hurricane Ida in late August 2021.
Around 73 per cent of soybean stocks (5.1 million tonnes) were stored off farm, as they were the previous year. However, this was only around half the previous year’s amount in external storage (10.4 million tonnes). By the end of the 2020/21 season, producers had sold 98.4 per cent of the 112.5 million tonnes harvested in 2020, which was significantly more than a year earlier. In 2019, the harvest had been smaller at 96.7 million tonnes, 4 per cent of which were still in storage on the farms in early September.
Chart of the week (40 2021)
Prices for oilseed meals stepped up
Whereas there was occasional demand for spot supplies of oilseed meal, interest in longer-term futures was small. Feed compounders also bought less.
Supply on the rapeseed meal market remained limited in some regions, but demand was also low. Anyone requiring rapeseed meal had to accept the prices asked. On the other hand, buyers were found only sporadically. September prices consistently showed a firm trend, but started off from a relatively low level. The average monthly price was only slightly higher than that recorded for August. Most recently, the bullish rapeseed market led to a sharp increase in prices. Agrarmarkt Informations-Gesellschaft (mbH) reported an average price of EUR 275 per tonne for spot rapeseed meal ex mill on 30 September 2021. This compares to EUR 265 per tonne at the beginning of the month. In other words, asking prices increased 0.8 per cent compared to the previous month and as much as 17 percent over the previous year's level.
The soybean meal market remained calm in September. Supply was adequate, both on nearby and further forward positions, although shipments from Argentina continued to be slow. Buying interest was focused on spot commodity, whereas futures for further forward positions or longer-term delivery periods were avoided in view of the recent sharp rise in asking prices. Soybean meal containing 48 per cent crude protein was priced at on average EUR 404 per tonne fob mill in September. This was only slightly up on the previous month's average but also 17 per cent higher than the wholesale price recorded in September 2020.
Chart of the week (39 2021)
Increase in sweet lupins and soybeans
Germany is set to bring in a bumper crop of legumes this year. The main reason is the sometimes significantly larger area planted, because not all legumes delivered good yields.
The total area of land planted with feed peas and other legumes for the 2021 harvest was expanded 11 per cent to 219,000 hectares. This was despite the fact that, according to Agrarmarkt Informations-Gesellschaft (mbH), there was less scope for producers to make decisions in the spring than there was in the previous year. The area for winter-planted crops for the 2021 harvest had been expanded to its old extent, because the weather was right at the time of planting. Nevertheless, farmers decided to plant more pulses, especially peas (+18 per cent) and sweet lupins (+32 per cent). The soybean area remained stable, whereas the field bean area declined 2 per cent.
The conditions for plant growth and pod formation were good, but the rainy summer cut yields this year, especially in feed peas. As a result, the pea harvest was up only 1 per cent on the previous year at 301,000 tonnes. Field beans were also affected by the poor weather, with 223,000 tonnes harvested, which is around 6 per cent less than in 2020. Soybean production is seeing a sharp rise and expected to reach 104,000 tonnes. This would be an increase of 14 per cent, although the area planted remained unchanged. Sweet lupins were left unperturbed by the wet summer. As they were mostly planted in drier sites, they experienced optimal conditions for the first time in years. Based on a 13 per cent increase in yield, the harvest volume is estimated to reach 53,000 tonnes. This would translate to a 56 per cent rise on the year.
Chart of the week (38 2021)
Rapeseed production to reach new lows
The USDA again lowered its forecast for global rapeseed supply in its latest outlook – to an unexpectedly large extent.
According to the latest USDA forecast, world rapeseed production in the crop year 2021/22 will presumably amount to 68.17 million tonnes. In other words, production was forecast down 1.8 million tonnes from the August estimate. This translates to a 4.12 million tonne drop over the previous year and would be the lowest level in nine years. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the EU-27 remains the biggest rapeseed producer. Heat and extreme dryness in Canadian rapeseed producing regions are having a tremendous impact on Canada's output.
Global consumption was also forecast down 0.76 million tonnes to 70.31 million tonnes. Reductions for China, Canada and the EU-27 were not offset by a higher consumption forecast for Japan.
The USDA put 2021/22 global ending stocks of rapeseed at 3.65 million tonnes. This would not only be a 40 per cent decline on the 2020/21 marketing season's ending stocks, but also the lowest level on record.
In the USDA outlook, exports were forecast down 0.55 million tonnes to 13.56 million tonnes from the previous month. Whereas Canada in particular will supply less due to the slump in production, the export outlook for the EU-27 was raised. Despite the declines, Canada is set to remain the main exporter with exports amounting to 5.8 tonnes.
Chart of the week (37 2021)
German biodiesel exports remain above average
Foreign trade in biodiesel is poised to decline in 2021. In the first half year, exports already plummeted 18 per cent and imports as much as 43 per cent. The supply and demand balance shows an export surplus of 503,460 tonnes, which is up 31 per cent year-on-year. Whereas exports exceeded the long-term average of 923,200 tonnes, imports dropped below the average level of 559,000 tonnes.
According to figures published by the German Federal Statistical Office, Germany exported around 933,117 tonnes of biodiesel in the first half of 2021 while importing only 429,657 tonnes. The Netherlands, the main EU marketplace for trading biodiesel, continued to be the primary trading partner, accounting for 42 per cent and 36 per cent of total exports and imports respectively. However, imports decreased significantly by 60 per cent. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), larger import volumes also came from Belgium, Malaysia and Poland, although they were smaller than in the year-earlier period. Imports were dominated by supply from other EU countries (84 per cent). Malaysia was the most important non-EU supplier country, once more ranking third, but only providing just less than 65,000 tonnes of biodiesel.
The main recipient countries of German biodiesel also were EU countries (88 per cent), headed by the Netherlands, Poland and Belgium. The most important non-EU country was the USA. The country took fourth place in the first half of 2021, although imports dropped 30 per cent year-on-year to just below 71,000 tonnes.
The UFOP has pointed out that these statistics take into account exclusively biodiesel. They do not include paraffinic fuels such as hydrotreated vegetable oil (HVO). In light of today's EU consumption level of approximately 3.6 million tonnes and the growing importance of such fuels in the future for meeting greenhouse gas reduction targets in all member states, the UFOP has underlined the urgent need to adapt official statistics – both at the domestic and the European level. More specifically, HVO should be listed separately.
The UFOP has explained that the fact that HVO is produced to a separate fuel specification and traded separately from biodiesel is an argument in favour of collecting HVO consumption data separately. The association has pointed out that HVO can be blended in fossil diesel fuel at a rate of up to 26 per cent, which compares to a maximum rate of 7 per cent in the case of biodiesel. The promotion of synthetic fuels (e-fuels) as initiated by the German federal and state governments and the approvals vehicle manufacturers have given for pure fuel consuming operating mode are additional reasons for collecting statistics on paraffinic fuels separately. The UFOP has indicated that the volumes of HVO consumed in Germany will not be listed until the Bundesanstalt für Landwirtschaft (BLE - Federal Office for Agriculture and Food) publishes its Evaluation and Progress Report at the end of the year.
Chart of the week (36 2021)
Less biodiesel consumed in the first half of 2021
The amount of diesel fuel consumed by road traffic was lower in the first half of the year 2021 than it was in the 2020 reference period. Accordingly, the use of biodiesel dropped by one fifth. On average, biodiesel was blended in at 7.1 per cent, which compares to 8.1 per cent in the year-earlier period.
In the first half of 2021, the use of biodiesel for blending amounted to around 1.14 million tonnes. This translates to a 19.6 per cent drop over 2020. If the trend in consumption were to continue along these lines in the second half of the year, the total use of biodiesel for blending would reach 2.4 million tonnes in 2021, according to calculations made by Agrarmarkt Informations-Gesellschaft (mbH). This figure compares to 3 million tonnes in 2020.
The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has pointed out that the quota years 2020 and 2021 are not comparable although mineral oil companies had and have to meet a greenhouse gas (GHG) reduction target of 6 per cent in both years. In 2020, all EU member states were required to implement the 6 per cent GHG reduction target in accordance with European Fuel Quality Directive regulations. However, quotas could not be carried over from the 2020 obligation year, but they can be brought forward again in 2021. The UFOP expects that the possibility to carry GHG quotas over will curb demand for biodiesel this year.
The UFOP finds it difficult to make a final assessment of how biodiesel use is going to develop in 2021, because the GHG reduction target will be raised to 7 per cent in 2022 and diesel consumption will tend to decline as a result of increasing e-mobility. State funding of e-mobility will first and foremost lead to a reduction in the number of diesel passenger cars. Against this background, the level of GHG reduction quotas that will be defined for the 2022 quota year as part of the RED II implementation is of importance for the exports of the German biodiesel industry. The time pressure for climate protection is strong. The increasingly smaller residual budget for GHG emissions permitted until 2030 also clearly illustrates the need to act. Consequently, the GHG mitigation potential of certified biofuels should be used as the EU's contribution towards meeting the 1.5 degree target in 2030.
Chart of the week (35 2021)
Pulse prices one fourth up on previous year
The 2021/22 season has started off with clearly higher prices for feed peas, field beans and soybeans grown in Germany. Field crops are yielding significantly higher prices than the previous year as the season starts. This also applies to pulses for grain use. Support also is coming form the global market, where prospects are bullish.
Although global supply of pulses is expected to be more abundant than the previous season, there is plenty of scope for speculation as long as the soybean crop has not been harvested in the US, the top exporter of soybeans. Uncertainty is also fuelled by the difficulty in estimating demand from the world's largest consumer, China. This environment determines prices also in Germany.
The German total area sown with feed peas, field beans and soybeans has been expanded 14 per cent compared to the previous year. Whether the expansion will lead to a rise in output in 2021 remains to be seen, because yields will not come close to the previous year's level due to poor weather conditions.
Nevertheless, producer prices of soybeans showed the typical harvest-related decline. However, the dip started from a significantly higher price level this year. According to Agrarmarkt Informations-Gesellschaft (mbH), the 2021/22 crop year kicked off with July producer prices around 24 per cent higher than a year earlier. Field beans showed the smallest rise at 10 per cent and soybeans the largest increase at 44 per cent. Feed peas were in between at 16 per cent. However, pricing was not finished yet, nor was harvesting.
According to the UFOP, the rise in the food industry's demand for domestic feedstock for vegetarian and vegan food production – especially peas and lupins – accounts for the price increases in grain legumes. There is reason to assume that this trend will continue in the next few years.
Chart of the week (34 2021)
Marketing of new-crop rapeseed meal in progress
Not only did byers expect the marketing season for by-products of new-crop rapeseed to start earlier than it did. They also hoped for more substantial price concessions. But the commodity remained in short supply.
At the end of July, spot commodity cost around EUR 300 per tonne ex mill. Deliveries from August onwards were at EUR 250 per tonne, up EUR 50 per tonne year-on-year. Asking prices have not declined since then, because the feedstock has become more expensive. Buyers were hoping for supply from the oil mills to exceed demand and for prices to fall. But it did not look like this was actually going to happen. Rapeseed meal was valued at the same price until the October delivery date, whereas premiums were asked for delivery from November onwards.
The fact that rapeseed meal was available again was reflected in ex-farm prices, which declined EUR 40 per tonne to EUR 318 per tonne compared to the previous month. In fact, in some regions – especially those close to processing locations – rapeseed meal was available at less than EUR 300 per tonne. However, this price did not exactly encourage buyers to conclude longer-term supply contracts, because it was still 30 per cent higher than a year earlier.
The price for soybean meal hardly changed, with asking prices only around 0.8 per cent lower than the previous month. This still translates to an almost 24 per cent rise year-on-year. GVO-free soybean meal was very expensive because it was very scarce. Even at the wholesale level, asking prices were up just over 60 per cent compared to a year earlier, although they most recently seemed to be on a weaker trend.
Chart of the week (33 2021)
Rising rapeseed prices at time of harvest
Delayed harvests in Europe with average results that did not always live up to expectations and dull harvest prospects in Canada which suggest that global supply is set to remain tight are currently driving producer prices for rapeseed.
The strong increase in prices is fuelled by the sluggish harvest in Western and Eastern Europe and continued dampened harvest prospects in Canada. Support also came from rising soybean prices over the same period. Paris listed new record levels for all futures traded on 13 June 2021 but, according to information published by Agrarmarkt Informations-Gesellschaft (mbH), maintained the familiar inverse that the stock market price declined for more distant futures. By contrast, cash market premiums tend to offset this development, at least until year-end.
Farmers' inclination to sell was mostly limited to commodity tied up in contracts. In fact, deliveries were made directly to the oil mills in some cases. The decision in favour of storage clearly prevailed. Producers were not entirely satisfied with the results of the 2021 harvest, having hoped for higher yields and oil content. Only very occasionally did producers take advantage of recent significantly higher bids to sell new-crop lots or conclude contracts for the 2022 crop.
Spot commodity ex farm was valued above the level of EUR 500 per tonne in all regions. The price of EUR 515 per tonne reported in calendar week 32 was just under EUR 11 per tonne higher than the price reported the previous week and up 43 per cent on the price reported at the same time a year earlier. The range of prices between regions remained large with prices from EUR 490 to EUR 535 per tonne free to warehouse. EUR 422-453 per tonne were under discussion for the 2022 crop.
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has stated that producers base their selling behaviour on their experience in marketing last year's harvest. They sold too much too early in 2020. The UFOP sees producer prices at a level necessary to compensate lower yields and higher spending on crop protection. The association has said that the marketing year shows the price trend that will be needed for all types of crops if arable farming loses productivity permanently as a result of the implementation of the EU Commission's "Farm to Fork" strategy. If, despite all critical indications in current impact assessment studies, the general suggestions for reduction are actually implemented, the introduction of effective "external protection" will be a compelling requirement. The association has pointed out that otherwise imports from third countries will undermine the EU's Level of Ambition.
Chart of the week (32 2021)
Another small rapeseed harvest in Great Britain
Great Britain was the fourth largest rapeseed producer and hardly relied on imports during its membership in the European Community. This has changed since the small 2020 harvest and there are no signs of a turnaround in the 2021/22 season.
By 27 July 2021, the British winter rapeseed harvest was approximately 9 per cent complete, according to the first harvest progress report of the Agriculture and Horticulture Development Board (AHDB). Rapeseed crops have been slow to mature, delaying the harvest. In terms of harvest progress, the 2021 harvest is currently the second slowest since 2014. Also, the area of land to be harvested, 315,000 hectares, is 17 per cent smaller than a year earlier.
Based on early yield indications, the AHDB puts the average yield of the 2021 winter rapeseed harvest in the range of 30-34 decitonnes per hectare, which is close to the long-term average of 33 decitonnes per hectare. This is as much as 19 per cent higher than the previous year's weak 27 decitonnes per hectare. Oil content is assessed in the range of 43-45 per cent. Drying has not been required due to the high temperatures in Eastern England.
The 2021 rapeseed harvest is estimated at 1.1 million tonnes, which would be only marginally up on the previous year's volume. In other words, extensive imports will once again be required for the 2021/22 marketing year, because domestic consumption (estimated at 1.6 million tonnes) could reach the long-term average of just less than 2 million tonnes. Consequently, the level of self-sufficiency is set to remain at the low level of 66 per cent. This compares to 100 per cent in the period from 2016 to 2018.
Chart of the week (31 2021)
Record harvest forecasts for EU soybeans and sunflowerseed
The oilseed harvest in the EU-27 is likely to see yet another rise in 2021. The main reason is prospects of bumper crops of soybeans and sunflowerseed. The rapeseed harvest is also seen to increase.
The oilseed harvest in the EU-27 could increase compared to the two previous years. The EU Commission currently estimates output for 2021 at 30.6 million tonnes. This would translate to a rise of just under 11 per cent over the extremely weak previous year. However, production would still fall about 1 per cent short of the long-term average.
The projected increase in sunflowerseed is particularly sharp. The main reason is expected exceptional yields, since the sunflower hectarage was changed only marginally compared to the previous year. The recently forecast 10.8 million tonnes would not only be a rise of just about one fourth year-on-year, but also a record volume. Based on quantity, sunflowerseed is the second most important oilseed crop in the EU-27. Rapeseed traditionally accounts for the largest share in oilseed output. The course was set early for a larger rapeseed harvest by a 3 per cent expansion in area. However, yields fail to meet expectations due to unfavourable growing conditions. In its latest estimate, the EU Commission lowered yield prospects 1.5 per cent to 31.8 decitonnes per hectare. However, this would still be up 2 per cent year-on-year and 4 per cent on the long-term average. In other words, the total EU rapeseed harvest in 2021 could amount to 16.9 million tonnes. This would be up 4 per cent year-on-year.
The third most important oilseed crop is soybeans. According to Brussels, based on a 3 per cent expansion in area planted and an estimated increase in yield of 8 per cent (which would come very close to that of 2019), the EU soybean harvest could reach 2.9 million tonnes. This would mean an 11 per cent rise year-on-year and the largest harvest ever in the EU-27.
In view of these yield expectations and the current very positive development of vegetable oil and oilseed meal prices, the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) e. V. has underlined the improved overall profitability and importance of these crops with respect to the need to adapt crop rotations to be more climate-resilient, and as flowering plants for more biodiversity in the future. Referring to the future arrangement of the arable farming strategy of the German Ministry of Agriculture, the association has emphasised that in Germany there is still significant potential for developing and growing grain legumes to optimise the climate performance and ecosystem services associated with nitrogen fixation by these leguminous crops.
Please find further Charts of the week in our archive.