Chart of the week (15 2023)

EU sunflower seed output set to hit record level in 2023

Especially in Romania and Hungary, sunflower seed output is expected to increase significantly compared to the previous year. It is seen to more than offset the anticipated declines in France and Germany.

According the latest EU Commission estimates, around 10.9 million tonnes of sunflower seed will be harvested in the EU-27 in 2023. This would not only be up just under 18 per cent on the previous year, but also hit a new record high. The forecast is based solely on yield increases, since the EU sunflower area will probably be around 7 per cent smaller than 2022 at 4.8 million hectares.

Romania is set to strengthen its position as the largest EU producer. At 3.3 million tonnes, the estimate is up as much as 967,000 tonnes – just less than 42 per cent – on the previous year. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the main reason for the strong production increase is higher yields, because the area planted with sunflowers will probably decrease marginally to 1.3 million hectares. Other EU member states, including Hungary, Bulgaria, Greece, Italy and Slovakia, are also expected to see considerable harvest increases. By contrast, France is forecast to harvest only 1.7 million tonnes of sunflower seed. This would translate to an around 105,000 tonne decline on 2022, partly because the sunflower area will probably be around 12 per cent smaller. For Germany, the EU Commission projects a sharp slump in sunflower seed production by more than half. Around 67,000 tonnes of sunflower seed are expected to be produced on a significantly reduced area of 32,000 hectares. A year earlier, the German sunflower area was expanded to a record high of 86,000 hectares due to the war against Ukraine, with production reaching 159,000 tonnes.

From the perspective of the Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP), this response in production behaviour is easy to understand since producer prices have fallen back to normal levels following their overheated development last year and with expected higher contribution margins, farmers have increasingly returned to relying on winter-planted crops. According to the UFOP, the development also highlights the importance of medium-term production and delivery contracts with traders and processors, if the German sunflower market is to be established at a permanently higher level.

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Chart of the week (14 2023)

EU Commission forecasts decline in EU soybean area for the 2023 harvest – UFOP welcomes the EU Commission's deliberations on how to develop and advance the European protein strategy

The legume area for the 2023 harvest is projected to see a slight decline.  The decrease is especially due to the smaller soybean area. The production area of feed peas and field beans could be expanded. 

According to an initial forecast of the EU Commission, the area dedicated to legume production in the EU-27 for the 2023 harvest is set to decline a good 1 per cent to just less than 2.5 million hectares. Nevertheless, this would still be the third largest legume area in the past ten years. Soybeans have accounted for the largest share since 2018. At an estimated 1 million hectares, the soybean area will probably drop just less than 9 per cent on the previous year, but still remain in the six-digit hectare range. The EU Commission sees 2023 feed pea production up 6 per cent compared to the previous season at 816,000 hectares. Field beans are expected to be sown on a 6 per cent larger area of around 464,000 hectares. By contrast, the sweet lupin area is estimated to shrink 4 per cent to 205,000 hectares.

As regards feed peas and field beans, the 2023 harvests could also increase, depending on weather conditions. Based on average yields, the feed pea harvest could increase 14 per cent year-on-year to 2.1 million tonnes. Whereas the harvest potential for field beans is seen to increase 8 per cent to 1.3 million tonnes, the EU Commission estimates the sweet lupin harvest at 273,000 tonnes, just under 5 per cent less. By contrast, according to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the decline in soybean area will probably be more than offset by expected higher yields. More specifically, the 2023 harvest could hit a record at 2.8 million tonnes, which would be rise of just less than 16 per cent on 2022.

With a view to the national arable farming strategy, the UFOP has urged to render the strategy visible by means of advanced crop rotation concepts and cultivation methods. This could be achieved by assessing the holistic approach of ecosystem services also in monetary terms. Such assessment would add an economic price tag to society's demand for more biodiversity in crop production. The UFOP has underlined that this is a necessary requirement for expanded crop rotation systems that include protein crops to develop into an economically sustainable component in arable farming, also in terms of business assessment. According to the UFOP, however, at the end of the day consumers decide at the point of sale whether such "binding" of land, as discussed in the Farm to Fork-Strategy of the European Commission, and effort are in fact wanted and also rewarded. Just how much perseverance it takes is also reflected in the "LeguNet" demonstration project which is funded by the German Ministry of Agriculture and in which the UFOP is involved as a project partner.

On the European level, the association welcomes the EU Commission's deliberations to develop the European protein strategy into a comprehensive, holistic approach. According to the UFOP, such approach should include both the direct use of vegetable protein as a source of protein for human nutrition and its indirect use via animal feeds, which use the livestock sector would stand to benefit.

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Chart of the week (13 2023)

Oilseed processing declined

In the first half of the running marketing year 2022/23, German oil mills processed less rapeseed, sunflower seed and fewer soybeans than in the same period a year earlier.

According to information published by the German Federal Office for Agriculture and Food (BLE), oil mills in Germany processed just under 4.5 million tonnes of rapeseed in the period July through December 2022. This translates to a just over 5 per cent decline year-on-year. Processors did not receive new supply from German production until August 2022, which was somewhat late. According to the BLE, rapeseed processing amounted to only 536,200 tonnes in July 2022, but increased to 721,200 tonnes in September and as much as 855,800 tonnes in October 2022. The all-time peak was recorded at 883,000 tonnes of rapeseed in August 2021.

Processing of other oilseeds slowed compared to the previous year's period, declining just under 11 per cent to 1.6 million tonnes in the half year under review. A noticeable increase was not recorded until December 2022, with processing reaching 323,500 tonnes, which compared to an average of 258,000 tonnes in the months before. Total oilseed processing amounted to just under 6.2 million tonnes. This was down 6.8 per cent on 2021 and comparable to the figure recorded in 2019. In general, production of vegetable oils and meals saw a slight decrease.

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Chart of the week (12 2023)

Presumably more sunflower seed in 2023/24

The International Grains Council (IGC) projects a global sunflower seed harvest of 54.8 million tonnes in 2023/24. This would be a rise of 8 per cent or 4 million tonnes from the current season.

The main reason for the projected growth is anticipated yield increases, which are seen to return to near-average levels following heat-related disappointing results in 2022. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), this especially applies to European production. More specifically, EU-27 sunflower seed output is expected to rise 1.1 million tonnes on the previous year. Notwithstanding uncertainties due to the war, the IGC expects Ukrainian production to increase 1.5 million tonnes to 13.5 million tonnes. Russia is seen to harvest 15.8 million tonnes (+0.8 million tonnes). The IGC projects the US sunflower seed output lower than in 2021. By contrast, China is not expected to see any significant changes in production.

The IGC has pointed out that the crop forecast is quite vague at this point because sowing campaigns have not even started in the most important sunflower seed producing countries. The projection for Ukraine is particularly difficult to make, because a significant part of the traditional production area is located in the currently embattled regions.

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Chart of the week (11 2023)

Argentina no longer among top three soy exporters

The crop forecast for Argentina was lowered again considerably, which also reduced consumption and export estimates.

In its latest report, the US Department of Agriculture (USDA) expects the global soybean crop in 2022/23 to reach around 375 million tonnes. This would be down just under 8 million tonnes from the February forecast, but up 17 million tonnes on 2021/2022. The decrease of the forecast compared to the previous month is mainly based on the drastically lowered outlook of Argentine production. The country has been struggling with continued dryness and extreme heat for several weeks, which is hampering yield prospects further. Argentina is expected to harvest only around 33 million tonnes of soybeans, 8 million tonnes or just under one fifth less than projected in February. With regard to other key soybean producing countries, such as Brazil, the US and India, the USDA holds on to its previous month's forecast.

World consumption is seen at around 371.1 million tonnes, down 5.3 million tonnes from the February forecast. Nevertheless, this translates to an increase of almost 9 per cent on the previous marketing year. The USDA lowered its consumption forecast especially for Argentina, to around 41 million tonnes in the current crop year. This is down 3.6 million tonnes from the February estimate and down 5.1 million tonnes on 2021/22. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), China's consumption is also likely to decline, more specifically just about 2.0 million tonnes to the projected 113.3 million tonnes.

Based on data from the USDA, around 100 million tonnes of soybeans are expected to be in storage at the end of the current marketing year, just over 2 million tonnes less than estimated in February, but about 1 million tonnes more than last year. Whereas China's stocks are seen to increase just under 2 million tonnes compared to the February forecast to 34.3 million tonnes, Argentine and Brazilian ending stocks are expected to shrink 2.6 million tonnes and 0.7 million tonnes respectively to 19.8 million tonnes and 31.5 million tonnes. Also, US ending stocks are projected to decline 0.4 million tonnes to 5.7 million tonnes.

On a global scale, around 168.4 million tonnes of soybeans will likely be shipped across the world's oceans in 2022/23. In other words, the USDA revised its previous month's forecast up just under 1 million tonnes. By comparison, just less than 154 million tonnes were shipped in the previous crop year. The increase over the previous month is especially based on expected larger exports from Brazil. Due to the considerably larger harvest, Brazil is seen to export approximately 92.7 million tonnes.

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Chart of the week (10 2023)

EU rapeseed imports 45 per cent above year-ago level

A slight decline of 1 percent to 2.516 million tonnes of biodiesel (from 2.560 million tonnes in 2021) was recorded for the 2022 calendar year. By contrast, the use of bioethanol in blends increased 3 per cent from 1.153 million tonnes to 1.186 million tonnes.

The preliminary statistics for 2022 published by the Federal Office for Economic Affairs and Export Control (BAFA), show an incorporation rate of 7.2 per cent for biodiesel and 7.0 per cent for bioethanol. Total consumption in Germany in 2022 amounted to 34.7 million tonnes of diesel (B 7) and approximately 17.0 million tonnes of petrol (E 5/E 10). This means that total consumption was at the previous year's level.

The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has pointed out that raising the greenhouse gas quota obligation from 6 per cent to 7 per cent the previous year did not lead to an increase in biofuels consumption, because trading in greenhouse gas reduction quotas and the increased efficiency of biofuels used in reducing greenhouse gas emission offset additional demand.

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Chart of the week (09 2023)

EU rapeseed imports 45 per cent above year-ago level

Year-to-date EU-27 rapeseed imports significantly exceed year-earlier levels – despite a considerably larger EU rapeseed harvest than last year.

In the current crop year 2022/23, rapeseed imports to the EU-27 climbed significantly. From July through February, member states already imported 4.6 million tonnes from non-EU countries. This was a full 45 per cent rise on the same period a year earlier. The main reason for the large import volume is not only abundant supply of EU rapeseed, but also availability and therefore the prices on the global market.

According to information published by Agrarmarkt Informations-Gesellschaft (mbH) (AMI), Ukraine has maintained its top position among the key rapeseed suppliers to the EU in the current crop year despite the continuing war. With 2.6 million tonnes, just under 63 per cent more than in the same period a year earlier, the country accounts for 56 per cent of EU rapeseed imports.  This share compares to 50 per cent in 2021/22. Australia gained in importance due to a bumper crop and now ranks second most important supplier to the EU with 1.7 million tonnes and a share of 36.4 per cent. This ís twice the amount of the same period a year earlier. By contrast, imports from Canada slumped. At 193,400 tonnes, the EU took only a fraction of the previous year’s amount of 501,800 tonnes. In other words, Canada's share in total EU imports dropped 12 per cent to 4.2 per cent. Supply from Moldova and Serbia to the EU-27 also declined compared to 2021/22.

The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has noted that the bottlenecks feared last year were mitigated by shipments to EU member states bordering Ukraine. The reason is that suppliers sought alternative delivery routes to the closed or blockaded sea ports. In the case of grain supply to the EU, there are even extreme market distortions at the moment instead of bottlenecks. The Polish farmers association has therefore called for an expansion of bioethanol production capacity to reduce pressure on the market and mitigate climate change. It also wants Super E 10 to be introduced across the board on the Polish market as soon as possible. The Indian Prime Minister Modi recently announced the expansion of bioethanol production and increase of the blending mandate to 20 per cent (E 20). At the same time, the German government is discussing a phase-out of blending biofuels from cultivated biomass.

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Chart of the week (08 2023)

Foreign trade in biodiesel rose to record level

UFOP: GHG quota policy is driving imports and exports of biofuels:
In the marketing year 2022, Germany shipped around 2.3 million tonnes of biodiesel abroad, the largest quantity ever. Imports also hit an all-time high of 1.4 million tonnes. The Netherlands remained the primary trading partner, in both directions.

The Netherlands remained by far Germany's most important trading partner for biodiesel. In fact, the country gained in importance in 2022, taking 21 per cent more biodiesel (1.16 million tonnes) than in 2021. The previous record high reached in 2020 was exceeded by 124,000 tonnes. With the Rotterdam facilities, the Netherlands is the most important European hub for world trade in biodiesel. Trade to Belgium and Poland also increased. Belgium, ranking second most important recipient country, purchased around 635,900 tonnes of biodiesel from Germany in 2022. This translates to a 61 per cent rise year-on-year. At 287,200 tonnes, shipments to the US doubled compared to 2021. Total German biodiesel exports reached a new record level at 2.34 million tonnes, with output amounting to approximately 3.2 million tonnes.

According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), biodiesel imports to Germany in the year 2022 had a volume of 1.36 million tonnes, which was up 31 per cent on 2021. The largest volumes came from the Netherlands, Belgium, Malaysia and Austria.  The increase in imports from Austria was particularly noticeable. At 82,000 tonnes, the volume shipped to the German market was a good one-and-a-half times higher on the previous year. Malaysia shipped around 84 per cent more. By contrast, imports from France virtually collapsed, nosediving 45 per cent.

According to the Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP), the German GHG quota policy is the key driver of this strong trade in goods. This is a desired effect of the resources policy and it is confirmed by the feedstock figures for the biofuel volumes that are counted towards GHG reduction targets, which figures have been published in The Evaluation and Progress Report by the German Federal Office for Agriculture and Food (BLE). In view of the initiative the Federal Minister for the Environment, Lemke, has repeatedly launched to abolish biofuels from cultivated biomass, the UFOP has expressed regret that this impact of the GHG quota regime is not recognised. The association has also underlined that for quality reasons, practically only rapeseed oil methyl ester (RME), i.e. feedstock from European cultivation, can be used to meet winter specifications.

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Chart of the week (07 2023)

Brazilian soybean production set to hit new record high

Brazil and Argentina re-affirm their shares in the global soybean market this crop year. Whereas Brazil is expecting another bumper crop, Argentine soybean output is projected to fall significantly short of the previous year's figure.

Brazil, the US and Argentina are the world's main soybean producing countries, collectively accounting for 81 per cent of global soybean output. India follows a long way behind with a share of 3 per cent. According to a USDA estimate, Brazil is seen to harvest an all-time record of 153 million tonnes of soybeans in the current crop year, which would be up around 23.5 million tonnes on the previous year. Brazil is consolidating its number one position ahead of the US based on a 1.9 million hectare expansion in soy production area to 43.4 million hectares. In the US, the soybean harvest was already complete by the end of the year 2022. It amounted to around 116.4 million tonnes, which translates to a decline of around 5.2 million tonnes year-on-year.

In Argentina, the world's third largest producer of soybeans, the harvest is set to decrease substantially compared to the previous year due to the continued dryness and extreme heat. November 2022 was in fact reported to be the hottest month ever in Argentine history. Against this background, the harvest is likely to decline around 2.9 million tonnes year-on-year to 41 million tonnes. In contrast, according to the latest USDA estimate, India anticipates an increase in harvest volume of around 100,000 tonnes on the previous year to 12 million tonnes.

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Chart of the week (06 2023)

Increase in rapeseed production reduces import demand

A significantly larger rapeseed harvest in the EU-27 has lowered the need for imports. Continued high demand for rapeseed oil for use in biofuels production and rapeseed meal for feeding purposes spurred processing.

According to information published by the EU Commission, the rapeseed harvest in the EU-27 was significantly larger in 2022 than in 2021. It is pegged at 19.6 million tonnes, which translates to a rise of around 2.5 million tonnes compared to 2021. In other words, the EU harvested the largest crop in five years, although substantial harvest losses had been expected because of the continued dryness and heat. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the rise is mainly the result of rapeseed harvest increases, especially in France and Germany. Denmark, Lithuania and Poland also recorded a rise. The harvest increases more than offset production declines in other member states. In other words, harvest figures are above-average again for the first time in four 4 years.

Total consumption in the EU-27 is seen at 24.2 million tonnes, up around 9 per cent year-on-year. Demand from oil mills is estimated at 23.3 million tonnes, which would also be an increase of just less than 9 per cent on 2021/22. A year earlier, just under 80 per cent of EU processing was sourced in European production. In 2022/23, the share will presumably climb to just over 84 per cent. For this reason, the EU Commission expects that in the current crop year less rapeseed will have to be imported. Rapeseed imports are forecast at 5.1 million tonnes, which is down 8 per cent compared to the previous year's volume. Ending stocks are seen to remain unchanged form the previous year at a below-average level of 0.5 million tonnes.

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Chart of the week (05 2023)

World harvest of dry peas increased

Both in Canada and Russia, the 2022 dry pea harvests were significantly larger than the previous year. Consequently, global output will probably also exceed the previous year's  level. UFOP calls on German federal and state governments to provide more support for domestic protein crops.

The International Grains Council (IGC) assumes that the global dry pea harvest will amount to 13.6 million tonnes in the marketing year 2022/23. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), this would translate to an 11.3 per cent increase on the previous season. The outlook is mainly based on higher harvest estimates for Canada and Russia. Canada – traditionally the world's most important dry pea-producing country – is expected to have harvested 3.4 million tonnes, around 1.1 million tonnes or 51.6 per cent more than in the historically weak previous year.

Russia also recorded a substantial rise. At 3.7 million tonnes, the dry pea harvest was up around 15.2 per cent on 2021. Consequently, the country is top of the list of dry pea producers for the second consecutive year. The EU-27 follows in third place with production remaining unchanged from the previous year at 1.8 million tonnes. According to the IGC, the decline in France, Spain and Romania was probably fully offset by larger harvests in Germany and Lithuania. The 2022 Ukrainian dry pea harvest is projected at 300,000 tonnes, down around 54.1 per cent on the previous year's levels due to the continuing war.

In view of the EU's large need for imports of feed protein, the Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has emphasised that the big potential of the production of dry peas and other large-grain legumes such as field beans, lupins and soybeans could be tapped. This was confirmed by the studies on UFOP's "10 + 10" strategy published by the association in February 2022. According to the UFOP, farmers have been waiting in the wings for many years without making any headway due to a lack of demand volume via value added in the commodity chain. Addressing the German Ministry of Agriculture, the UFOP has called for stronger and reliable support for the protein crop strategy in terms of product development and sales promotion in order to provide a sustainable economic incentive to expand crop rotation with grain legumes. The German states have also been urged to promote grain legume cultivation through second-pillar agricultural policy programmes. Consumer interest is basically strong. This was reflected in a lot of discussions with visitors to the UFOP stand during the International Green Week. Also, many producers are strongly committed to developing products for direct use in the human diet.

The UFOP has emphasised that the importance of these crops as flowering plants for biodiversity as well as nitrogen-fixers for climate protection – and, consequently, their contribution towards the overall ecosystem performance of extended crop rotation systems – is common knowledge and generally acknowledged. In light of climate change and its implications, the pressure to act and succeed is enormous, the association has underlined, referring to the 1.5-degree target to be reached by 2030. The UFOP has stressed that grain legumes are an essential element to improve soil fertility, establish resilient crop rotations and increase soil carbon content.

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Chart of the week (04 2023)

Minor global land requirement by biofuels

UFOP: feedstock production for biofuels buffers supply to ensure food security

In 2021, crop plants were grown on more than 1.4 billion hectares worldwide, including grain, oilseeds, protein, sugar and fibre plants, fruits, vegetables, nuts and others. Most of these crops were used directly or indirectly, via livestock feeds, for human nutrition. Only around 8 per cent of the crop area served to supply feedstock for biofuels production.

Production of feedstock for use in biofuels is concentrated in regions with structural surpluses. This is reflected in high mandates for blending compared to the EU, for example in Indonesia (35 per cent biodiesel) or the US (15 per cent bioethanol). The main motives are stabilising the market and agricultural producer prices as well as making a contribution towards securing energy supply. If there were no biofuels which serve as a supply buffer, pressure on feedstock prices would increase.

The Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has pointed out that high-quality protein is obtained as a by-product of biofuel production and used for livestock feeding purposes or directly in the human diet. The argument of land requirement for biofuels production urged in the debate on global changes in land use disregards the fact that the percentage of area used for protein production should be subtracted and accounted for. With rapeseed having a share of 60 per cent feed protein, only 40 per cent of the crop area should be allocated to the production of biofuels, the UFOP has argued. From the association's perspective, this would be a fair and proper approach, because missing protein volumes would have to be made up for by imports that would require additional land use.

This compensating effect is deliberately neglected in all so-called iLUC studies and related discussions. UFOP has strongly emphasised this fact in view of the initiative recently announced by the Federal Minister for the Environment Lemke to phase out production of biofuels from cultivated biomass as from 2030. From the perspective of the UFOP, it is incomprehensible that the German Minister of Agriculture Özdemir supports this initiative and disregards the interdependencies that have long been common knowledge. After all, domestic and European rapeseed production to make transport fuel also secures supply of genetically unmodified rapeseed protein for milk production. Virtually every dairy product bearing the "without GM“ label demonstrates that the cows at the top end of the commodity chain were fed with sustainable certified rapeseed meal from biodiesel production.

With her initiative, Federal Minister for the Environment Lemke is also creating precedents that put a question mark on the point and necessity of drawing up and discussing a National Biomass Strategy (NABIS) with agriculturists. Where is the basis of discussion if the legal framework is defined unilaterally, as in the case of biofuels, the UFOP is asking. According to the association, the bill anticipates the result. The preference the strategy gives to the material use of renewables will come to nothing because of the lack of concepts for market access of products from locally grown feedstocks. The size of production area plays virtually no role – despite 30 years of product promotion by the German Ministry of Agriculture. The majority of feedstocks, such as palm oil, is imported anyway. Ironically, proof of deforestation-free sourcing of such imports has been a statutory requirement since 2020. Such proof has been required for biofuels already since 2009 (no deforestation after 2008). The UFOP has underlined this fact, pointing out that the association has repeatedly highlighted the role model function the sustainability certification has and the sanction possibilities it offers – even in non-EU countries. The association added that the proof of greenhouse gas reduction is also the key to market access.

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Chart of the week (03 2023)

IGC sees global rapeseed area for the 2023 harvest marginally down on last year

Whereas the rapeseed areas in India, China and Australia are expected to decline, those in the EU-27 and Ukraine are seen to increase.

In its first estimate of the global rapeseed area for the 2023/24 marketing season, the International Grains Council (IGC) projected an area of 40.2 million hectares. The estimate is 1.5 per cent below the current season's record area and would be the second largest rapeseed area ever. It would significantly exceed the long-term average. Whereas rapeseed production in India, China and Australia will presumably decrease, according to Agrarmarkt Informations-Gesellschaft (mbH) the Canadian rapeseed area is set to remain unchanged from the previous year at 8.6 million hectares. The Council pointed out that the first forecast involves a great deal of uncertainty.

According to the estimates, the EU-27 rapeseed acreage for the 2023/24 marketing season was expanded to 6.0 million hectares. This would be up 1.7 per cent on the previous year's area. In particular, France and Germany (1.2 million hectares) saw an increase in rapeseed area. At the end of December, the condition of most winter crops was considered to be good. According to surveys conducted among producers, the UK rapeseed area was also expanded significantly, by 14 per cent, compared to the previous year.

In Ukraine the area planted to rapeseed is expected to expand 8.3 per cent to 1.3 million hectares, whereas the Grain Council sees Russia's area unchanged from the previous year at 2.3 million hectares

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Chart of the week (02 2023)

FAO-price index below previous month's mark

UFOP: sustained biofuels contribute towards securing food and energy supply

Both the FAO vegetable oil index and the cereal price index eased month-on-month. Nevertheless, record highs were reached year-on-year.

The December FAO vegetable oil price index averaged 144.4 points, which was down 6.7 per cent on the previous month' s level. In other words, the index reached the lowest level since February 2021, particularly due to falling prices for palm, soybean, rapeseed and sunflower oil. World market prices for palm oil dropped just about 5 per cent after having recovered for just a short time the previous month. The key reason was restrained global demand, because output by the most important palm oil-producing countries declined due to excessive rain. World market prices for soybean oil also showed a decrease, above all because of bright prospects for a seasonal rise in production in South America. Prices for rapeseed and sunflower oil fell based on abundant supply and dampened demand, especially in the EU. Pressure also came from declining crude oil prices. Looking at the entire year 2022, the FAO vegetable oil price index was 187.8 points. This translates to a 13.9 per cent increase on 2021 and sets a new annual record. 

International grain prices waned in December. The FAO cereal price index averaged 147.3 points. This was down 4.8 per cent on the previous month, but still up 4.8 per cent on the same month the previous year. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the index for the year 2022 reached a new high at 154.7 points. This was up 17.9 per cent on 2021 and outstripped the previous record high of 8.8 per cent recorded in 2011.

On the occasion of the current FAO publication, the Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has pointed out that, in terms of figures, food supply per capita of the world's population is covered despite the war in Ukraine, given good harvests of oilseeds, at 0.644 billion tonnes, and grains (including rice), at 2.76 billion tonnes. Nevertheless, the FAO lists 44 countries that rely on foreign food aid. Of these, 33 are in Africa. The UFOP has contended the negative debate on biofuels from cultivated biomass as it does not take account of these contexts. The association has made clear that the question of food security does not arise for Germany and the EU.

The UFOP expects the German Minister of Agriculture, Cem Özdemir, to conduct a proper discussion that also takes into account the fact that approximately 60 per cent of the rapeseed area is dedicated to the production of protein feed and such protein feed does not need to be imported from non-EU countries. The UFOP has expressed its strong support of the BMEL's protein plant strategy, but stressed that such strategy would have to incorporate all protein crops, even if part of the output is used to produce biofuels. This is the ideal combination of adding value and making an appreciable contribution towards climate change mitigation, the association has added. It should be kept in mind that the cultivation of rapeseed, grain and other arable crops is subject to natural or ever-tightening legal restrictions. The UFOP has urged the Federal Minister Özdemir to take a holistic view of these aspects as this would be the only way an arable farming or national biomass strategy would make sense in regard to supply and climate change mitigation.

Referring to the statutory 4.4 per cent cap on biofuels from cultivated biomass, the association has again pointed out the restrictions on the potential use of agricultural feedstock to produce biofuels. The UFOP argues that in view of climate mitigation targets, it is all the more important to utilise the potential of the current area of land under cultivation to create sustainable value. The implementation of the Renewable Energy Directive (RED II), which created the basis for global sustainability requirements for biomass cultivation also in third countries, should also be looked at in this light. Anyone calling for the abolition of biofuels from cultivated biomass should also be honest to admit that this would mean to forego the benefits of shaping an internationally binding regulatory framework for the sustained cultivation of biomass.

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Chart of the week (01 2023)

More soybeans from India

The USDA sees output and consumption, but also ending stocks and world trade in soybeans, slightly above the previous month's estimate.

In its latest report, the US Department of Agriculture (USDA) expects global soybean production in 2022/23 to reach around 391.2 million tonnes. This is up 0.6 million tonnes on the November 2022 estimate. Nevertheless, the figure translates to an expected increase of 35.6 million tonnes on the previous marketing year. According to Agrarmarkt Informations-Gesellschaft (mbH), the upward revision is based on the raised forecast for India, which is seen to harvest around 12 million tonnes of soybeans in the current season. In November, the USDA had anticipated 11.5 million tonnes. The forecast for Canada was raised marginally 43,000 tonnes to 6.5 million tonnes. In contrast, the USDA held on to previous estimates for key producing countries such as Brazil, the US and Argentina.

Based on a presumably larger global availability of soybeans, the USDA also expects consumption to increase in 2022/23. Soybean processing is estimated at 380.9 million tonnes, up 0.7 million tonnes from the previous month's forecast. In 2021/22, demand was 17.5 million tonnes lower at 363.4 million tonnes.

Consequently, ending stocks are likely to rise 0.5 million tonnes to 102.7 million tonnes compared to the November forecast. This means that global ending stocks would exceed the previous year's volume by 7.1 million tonnes. The increase is primarily based on raised estimates for Brazil to 31.7 million tonnes (+0.5 million tonnes from the November forecast) and the EU to 1.7 million tonnes (+0.3 million tonnes). It can more than offset the decline in Argentine ending stocks of 0.5 million tonnes to 23.5 million tonnes.

The USDA also sees world trade in soybeans higher than the previous month, though only minimally. At presumably 169.4 million tonnes, shipments are up 0.2 million tonnes on the November estimate. This translates to a 15.6 million tonne rise compared to 2021/22.

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Significantly fewer soybeans from Brazil

Soybean is the most important oilseed crop imported to the European Union, ahead of rapeseed.  EU-27 imports in the first four and a half months of the running marketing year amounted to just less than 4.9 million tonnes. In the same period of the 2021/22 season, imports were around 900,000 tonnes larger. There were significant shifts in suppliers of both imported and processed soybeans.

Brazil and the US remained the top suppliers. By mid-November, around 1.7 million tonnes of soybeans had come into the EU from Brazil. This was only half the previous year's volume of 3.4 million tonnes. Consequently, the share of Brazilian soybeans in total EU soybean imports dropped 23 percentage points to 36 per cent. The gap was filled by increases in deliveries from the US. More specifically, the US delivered around 2.1 million tonnes in the period 1 July to 11 December 2022, which was up 31 per cent on the same period a year earlier.

Soybean meal is an equally important import commodity for Europe. Its import volume was only slightly smaller than the previous year. At 7.1 tonnes, soybean meal imports were down just less than 19,000 tonnes on the same period last year. Again, there were shifts in suppliers. According to Agrarmarkt Informations-Gesellschaft (mbH), Brazil moved to the top of suppliers, delivering 800,000 tonnes more than in last year's period. At 3.8 million tonnes, Brazil is now ahead of Argentina, which delivered just less than 2.6 million tonnes. This was down 600,000 tonnes year-on-year.

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Record year of oilseed production

According to current USDA estimates, global output of oilseeds in the crop year 2022/23 is set to hit a peak of around 644.4 million tonnes, which would be up around 7 per cent year-on-year. With that, the current forecast is slightly more cautious than the previous estimate.

Global processing of oilseeds is also set to rise to a record high of 533.4 million tonnes, according to the most recent USDA outlook. This would be up around 21.9 million tonnes on the crop year 2021/22. Global ending stocks will presumably amount to 121.4 million tonnes, which would exceed the previous year's level by 7.1 tonnes. However, ending stocks are seen to be clearly below the 2018/19 season's 134.1 million tonne record high. Also, world trade in oilseeds is expected to record a 20.3 million tonne increase to 198.3 million tonnes.

At 391.2 million tonnes, the current crop year's soybean harvest is expected to be larger than ever. In contrast, global output of sunflowerseed is set to decline 12 per cent on the year to 50.7 million tonnes, whereas world rapeseed production is seen to increase 10.4 million tonnes to 84.3 million tonnes. According to Agrarmarkt Informations-Gesellschaft (mbH), this outlook is based on harvest increases in major rapeseed producing countries, especially Canada. It should be noted that the USDA oilseed estimate also includes peanuts (approximately 50.3 million tonnes) and cottonseed (approximately 42.1 million tonnes), among other oilseeds.

The surge in soybean output is especially due to changes in land use (clearing primeval forest) in South America. According to a report published by the Food and Agriculture Organization of the United Nations (FAO) in 2020, Link⁾, global forest loss in the period 1990 to 2020 extended over an area larger than the EU. In the light of this, the Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has welcomed the agreement reached on the EU Supply Chain Law at the beginning of December 2022 for deforestation-free sourcing of soybeans and palm oil, among other produce. Providing proof of land use for this produce was not an obligation for obtaining a sustainability certification until 2020, whereas providing such proof for biofuels has been a requirement since 2008.

The UFOP has repeatedly emphasised the model role the Renewable Energy Directive plays with regard to sustainability and documentation requirements, in particular the evidence of reduction in greenhouse gas emission. This also includes the option of using satellite technology. The UFOP has called to mind the "GRAS" project sponsored by the Agency for Renewable Resources (FNR). All the more surprising is the response of some members of the European Parliament who referred to the regulation as a "world first". The association has underlined that these import restrictions have been relevant for the market access of biofuels from cultivated biomass since 2008.

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Extreme dryness diminished yield potential of EU sunflowers

In the EU-27, the 2022 harvest of sunflowerseed came in considerably lower than 2021 due to extreme dryness. It was also short of the long-term average.

According to the latest EU Commission's estimate, 9.3 million tonnes of sunflowerseed were harvested in the European Union in 2022. This would be around 10 per cent less than in 2021. In other words, both the 2017 bumper crop of 10.4 million tonnes and the long-term average of 10.2 million tonnes were clearly missed. The area planted was expanded around 18 percent to a new record of 5.1 million hectares, but at 19.5 decitonnes per hectare, yields fell nearly 18 per cent short of those reached in 2021. The continued dryness and extreme heat over the summer months led to harvest losses. The genetic yield potential could not take effect.

The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) nevertheless regards sunflowers as a crop alternative in some regions in order to expand crop rotations and minimise risks. The UFOP recommends that in view of the uncertain supply situation for sunflowerseed and sunflower oil from Ukraine farmers take sunflowers into account when planning their 2023 sowings. The annual variety trials that are funded by the UFOP and conducted in cooperation with the responsible regional authorities confirm the high yield potential of both conventional and high-oleic varieties, also in terms of oil content. These and other findings relating to rapeseed and grain legumes are available as a free download (in German only) at: LINK

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Summer crops with sharp declines in yield

Yields of both soybeans and sunflowerseed were substandard in Germany in 2022 due to poor growing conditions during the summer months.
UFOP: make arable farming strategy visible

According to preliminary information published by the German Federal Statistical Office, around 159,400 tonnes of sunflowerseed were harvested in Germany in 2022. This was up 59,700 tonnes on the previous year and almost three times the long-standing average. The main reason for the increase was an expansion in area planted. Sunflowers were grown on 85,300 hectares in 2022, more than twice the previous year's area. However, the presumed yield of 18.7 decitonnes per hectare dashed expectations, not only falling 7.4 decitonnes per hectare short of the previous year's yield, but also remaining well below the long-standing average of 22.0 decitonnes per hectare. They key reasons were the drought and heat over the summer months, which diminished the yield potential significantly.

Soybean farming has played an appreciable role in Germany since 2015 and has grown continuously and substantially since then. In 2022, the soybean area increased another 17,200 hectares to 51,400 hectares. But again, yields fell short of the previous year's figure due to the poor growing conditions during the summer. They dropped 6.4 decitonnes per hectare to 24.8 decitonnes per hectare. Nevertheless, based on the substantial expansion in area planted with soybeans, the soybean harvest rose to 127,700 tonnes, which was up around 21,100 tonnes on the previous year's level. Bavaria and Baden-Wuerttemberg remained the most important production regions.

The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) regards the positive trend in area planted as evidence of arable farmers' fundamental interest in diversifying crop rotations and making them more resilient in view of climate change. Unfortunately, such willingness to change was not rewarded, especially in the case of sunflowers. Some farmers also lacked experience in cultivating this crop. According to the UFOP, agricultural and public consultants are challenged to respond to this situation and take much more account of small-scale crops, such as legumes and also sunflowers, in their consulting practice and cultivation trials. The UFOP believes that there is still room for improvement in developing the German Ministry of Agriculture's arable farming strategy in a holistic manner and make it visible also through the leading farms.

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IGC estimates global 2022/23 rapeseed harvest higher than previous year

According to recent information published by the International Grains Council (IGC), world rapeseed production will likely exceed the previous year's level by 15 per cent. For the 2022/23 marketing year, the IGC sees consumption and international trade volume at a record level. Global rapeseed stocks are seen to rise considerably at the same time.

The IGC projects a convenient global rapeseed supply of 84.4 million tonnes for the 2022/23 marketing year. For Australia, the Council lowered its forecast marginally by 0.1 million tonnes due to the floods. Nevertheless, this translates to an expected increase of 15 per cent on the previous marketing year. Increased production in Canada, projected at 19.1 million tonnes (+5.3 million tonnes on the previous year), the EU, at 19.6 million tonnes (+2.2 million tonnes), and Russia, at 4.9 million tonnes (+1.9 million tonnes), can more than offset the declines in Australia, to an estimated 6.5 million tonnes (-0.3 million tonnes), and India, to 10.3 million tonnes (-0.2 million tonnes).

Based on the abundant availability, global consumption in 2022/23 will likely amount to around 83 million tonnes, which would be an 11.2 per cent rise year-on-year. Consumption within the EU is estimated at 24.7 million tonnes (+2.3 million tonnes).

The IGC forecasts ending stocks at 5.5 million tonnes, which is up 1.4 million tonnes or 34 per cent on the previous year's volume.

Due to the abundant export opportunities and high price level, international trade in rapeseed will probably reach 18.4 million tonnes in 2022/23, exceeding the previous year's volume by 3.8 million tonnes. China, Japan and Pakistan are seen to remain major destinations. Imports to the EU are expected decrease on the previous year because of the large EU harvest. Ukrainian exports are currently seen at 2.8 million tonnes, exceeding the previous year's level by 0.1 million tonnes despite the continuing conflict. Canadian exports are set to rise considerably compared to the previous year due to the larger harvest.

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Germany key rapeseed oil supplier to the EU

Shipments of German rapeseed oil declined in the 2021/22 marketing year, following three consecutive years of considerable growth. Exports were not so much to third countries, but more to EU neighbour countries.

At just less than 1.1 million tonnes, Germany exported just about 22 per cent less rapeseed oil in 2021/22 than in the previous season. Nevertheless, exports exceeded the volume of the 2019/20 marketing year by 13 per cent.

The Netherlands, which acts as a central hub for world trade in agricultural commodities, remained the by far largest recipient country of German rapeseed oil in 2021/22. The country took 600,000 tonnes, which was, however, 150,000 tonnes fewer than the previous season. Belgium ranked second, taking 86,500 tonnes, around 17 per cent less than 2020/21. It was followed by France, Denmark and Poland as major destinations. These countries received significantly more rapeseed oil than a year earlier. France purchased around 65,000 tonnes (+18 per cent), remaining an important market. Denmark received around 64,600 tonnes (+12 per cent). Shipments to Poland showed the biggest increase. Reaching 58,000 tonnes, they nearly doubled over the previous year's volume. Switzerland, Austria, Lithuania, Greece and the Czech Republic also received considerably more than in 2020/21, whereas deliveries to Italy, Portugal and Ireland declined.

The Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has ascribed the decrease in rapeseed oil exports to the growth in demand for domestic biodiesel processing. The association expects that this development will continue in the 2022/23 marketing year, because palm oil-based biofuels can no longer be counted towards GHG quota obligations from 2023 onwards. German and European farming of rapeseed is gaining more and more importance for supplying the German and European biofuels industry for biodiesel or hydrogenated vegetable oil (HVO) production. For this reason, the UFOP expects the rapeseed area in the EU-27 to stabilise at the current level of approximately 5.8 million hectares. Due to the winter months ahead, rapeseed oil-based biodiesel is increasingly used in the northern EU countries. This genetic edge provided by the fatty acid composition of rapeseed oil ensures a sales potential that could only be avoided during this period using hydrotreated vegetable oil (HVO), which is more expensive than rapeseed methyl ester (RME).

Referring to the shaky supply situation for 2023 due to the war and as a consequence of the challenges caused by climate change, the UFOP has recommended that farmers boost sunflowerseed production by concluding appropriate forward contracts for 2023 sowings. The association has pointed out that, along with rapeseed potential, there is additional land and feedstock potential that can be exploited to improve biodiversity and expand regional crop rotations.
 

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Diesel fuel consumption reached three-year high

The use of diesel fuel reached its highest level since October 2019 at 3.1 million tonnes in August.
 
In August 2022, 212,960 tonnes of biodiesel were used for blending, which was up 6.1 per cent on the previous month. Since at the same time, consumption of diesel rose 8.8 per cent to 3.1 million tonnes, hitting a three-year high, the incorporation rate declined 0.2 percentage points to 6.4 per cent. This was the lowest incorporation rate since the beginning of the year. In other words, total consumption of diesel and biodiesel in August amounted to just over 3.3 million tonnes, which was 3.7 per cent more than in August 2021. Biodiesel consumption in the running year totalled just over 1.6 million tonnes. The January to August 2022 incorporation rate averaged 7.2 per cent. This compares to 7.4 per cent in the year-ago period.
 
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). UFOP estimates biodiesel/HVO demand in the 2022 calender year to be slightly lower than in 2021, when the amount used was 2.53 million tonnes. The trend is towards a decline in demand for diesel and energy as a consequence of increasing e-mobility and the advancing energy efficiency associated with this type of powertrain.
 
In view of the current debate on the German government coalition's Immediate Climate Action Programme and criticism from the government's Expert Council on Climate Issues, the UFOP has emphasised that in 2030, the target year set out in the German Climate Change Act, more than 35 million vehicles will still be powered by combustion engines in Germany. The association is convinced that in order to meet the GHG quota obligation and emission requirements for traffic, 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.
 

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Global vegetable oil production set to hit another record high

Global output of vegetable oils is set to increase to new record highs in the 2022/23 crop year. Production of both rapeseed and soybean oil as well as palm and sunflower oil will rise.
 
According to the latest outlook published by the US Department of Agriculture (USDA), 2022/23 global production of vegetable oils will amount to 219.8 million tonnes. This would be an 8.3 million tonne rise compared to 2021/22. In other words, production will presumably fully cover demand of 213.6 million tonnes also in the current crop year.
 
According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), palm oil is set to remain the world's most important vegetable oil in terms of production and consumption, with global output estimated at 79.2 million tonnes. This translates to a 3.2 million tonne increase over 2021/22. In other words, palm oil accounts for just over 36 per cent of global vegetable oil production. Indonesia remains the largest palm oil producer with an output of 46.5 million tonnes, followed by Malaysia with 19.8 million tonnes and Thailand with just less than 3.3 million tonnes.
 
Production of soybean oil is expected to grow 4.2 per cent to 61.9 million tonnes and could hit a new record. China remains the most important producer with production amounting to 17.2 million tonnes, whereas the USA ranks second with just under 11.9 million tonnes. Production of rapeseed oil is seen to amount to 31.5 million tonnes, around 8.5 per cent more than the previous crop year due to unexpectedly abundant yields and high oil contents.
 
Production of sunflower oil will probably expand around 1 percent to 20.1 million tonnes in 2022/23, although global supply of sunflowerseed is clearly short of the previous year's figure despite an expansion the area planted. The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has pointed out that farmers in Germany also expanded their sunflower areas in 2022 because of persistently high prices for sunflower oil. Although not all yield expectations were fulfilled due to the extreme heat, the German sunflower hectarage for the 2023 harvest is expected to remain stable.
 

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IGC: more sunflowerseed from America

Whereas poor growing conditions in the EU-27 limited yields, the US and Argentina in particular are expected to bring in a significantly larger sunflowerseed harvest.
 
According to information published by the International Grains Council (IGC), around 52.1 million tonnes of sunflowerseed will likely be produced globally in the 2022/23 crop year. This would be 700,000 tonnes more than forecast in September, but nevertheless 7.9 per cent short of the previous year's volume. Whereas Russia is seen to produce 6.5 per cent more sunflowerseed than 2021/22, Ukraine's supply will probably shrink by one third due to the continuing war and decline in sunflower area. Just less than half the Ukrainian area was reportedly harvested by 14 October 2022. However, rain has recently delayed harvest operations and exacerbated concerns about a considerable drop in quality.
 
Despite an expansion in area, EU production, at 9.5 million tonnes, is also expected to fall around 8.9 per cent short of the previous year's output as poor growing conditions over the summer months reduced the yield potential significantly. By contrast, the IGC is optimistic about sunflowerseed supply in North and South America. In view of an increased sunflower area, US production is seen to reach 1.3 million tonnes, which would be up 45 per cent on the previous year's level. The same applies to Argentina, with a likely rise of around 8.7 per cent to a record amount of 4.4 million tonnes.
 

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Canada's rapeseed harvest not yet back to old size

The 2022 Canadian crop far exceeds the previous year's volume, which was reduced by drought, but nevertheless remains smaller than average.
 
Following the past drought year in 2021 and record low Canadian canola production, the International Grains Council (IGC) is positive about Canadian rapeseed supply in 2022. Although the area planted with rapeseed was scaled back 4 per cent to 8.7 million hectares, the harvest will probably be significantly larger. The main factor is higher yields due to significantly better growing conditions for the field crops compared to the same period a year earlier. At 22.3 decitonnes per hectare, the forecast average yield is 44.8 per cent higher than the previous year. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), based on this forecast the rapeseed crop is likely to reach 19.1 million tonnes, which compares to only 13.8 million tonnes in the drought-stricken previous year. Nevertheless, rapeseed production in 2022 will probably fall 0.4 million tonnes and 0.5 million tonnes short of 2020 and 2019 respectively.

Based on a domestic rapeseed consumption of 10.5 million tonnes, around 1.1 million tonnes more than the past crop year, there will be a surplus of 8.6 million tonnes. Nevertheless, in view of low beginning stocks, supplies - at 900,000 tonnes - will likely fall short of the previous year's volume of 1.7 million tonnes. AMI believes that due to larger Canadian production, rapeseed exports will presumably rise significantly to around 8.5 million tonnes. This would translate to a 60.3 per cent rise year-on-year. Domestic consumption could also increase. Forecast at 10 million tonnes, it would exceed the previous year's volume by 16.3 per cent.

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EU rapeseed imports up 40 per cent on previous year

Year-to-date EU-27 rapeseed imports significantly exceed year-earlier levels – despite a considerably larger EU rapeseed harvest than the previous year.
 
The EU-27 imported just less than 1.7 million tonnes of rapeseed in the first 14 weeks of the 2022/23 season. This translates to a full 40 per cent rise over past marketing year. Compared to the 2020/21 season, the volume is slightly smaller by around 1.5 per cent. Naturally, the main reason for the fluctuations in import volumes is availability in the world market, along with European rapeseed supply. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the European rapeseed crop will presumably amount to 18.8 million tonnes in the current marketing year. This is up just less than 11 per cent year-on-year. However, total demand from oil mills in the EU amounts to around 23.3 million tonnes. For this reason, the EU Commission estimates the need for imports from third countries at 4.5 million tonnes, which would be 1.1 million tonnes fewer than 2021/22.
 
In view of import demand, significant changes in trade flows can be expected. As in previous years, Ukraine was the primary supplier. According to information published by AMI, imports increased 40 per cent despite the continued war. At the same time, imports from Australia increased significantly in the third quarter and in fact doubled on the same period a year earlier. Following sharp yield losses in the previous drought year, Canada also re-gained importance with deliveries rising around 25 per cent. By contrast, imports from Moldova and Serbia declined 29 per cent and 57 per cent respectively, though at a low quantitative level.
 

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International Grains Council (IGC) has lowered soybean forecast, but nevertheless sees ending stocks to rise

The International Grains Council (IGC) has estimated global supply of soybeans to be lower, but still at a record level. Although demand for soybeans continues to grow all round the world compared to the previous year, supplies are seen to grow even stronger than previously expected.
 
In its latest report, the International Grains Council (IGC) adjusted its estimate of global soy supply 2022/23 downwards 2 million tonnes to 387 million tonnes. Nevertheless, supply in the current crop year is likely to reach a record high, surpassing the previous year's level by just less than 10 per cent.
 
The main reason for the adjustment was lower US crop expectations. US soybean production is projected at around 119.2 million tonnes, 4.1 million tonnes lower than previous expectations. Poor growing conditions have recently reduced the yield potential considerably. Moreover, the US area planted with soybeans will probably be smaller than forecast in August. The recent rainfall in some regions, however, is seen to be potentially favourable for late-season crops. By contrast, the estimate for Brazilian soy supply was raised to 146 million tonnes, up around 1 million tonnes from the previous month's forecast. The increase is mainly based on a presumably 3 per cent expansion in area. Ukraine is also expected to harvest more soybeans this year – 3.6 million tonnes, which would be up 0.7 million tonnes.
 
Global soybean consumption is currently estimated at 378 million tonnes. This is down 1 million tonnes on the August outlook, but 4.3 per cent higher than 2021/22. Demand is expected to see a sharp increase, especially in China, but equally in Bangladesh and Pakistan.
 
In view of the bumper soybean crop, 2022/23 ending stocks are also likely to grow. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), in purely arithmetic terms, this would result in a global soybean surplus of 9 million tonnes. Along with beginning stocks, 2022/23 ending stocks will increase to around 53 million tonnes, which is 1 million tonnes more than forecast in August. This translates to a 19.3 per cent rise on the previous year's figure. Ending stocks of the key exporters are expected to increase 19.5 per cent year-on-year. US soybean stocks are assumed to shrink the fourth season running, dropping to 4.6 million tonnes, the lowest level in 13 years.
 

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German biodiesel exports at a high level

Foreign trade in biodiesel is poised to increase in 2022. In the first half year, exports climbed 27 per cent and imports as much as 75 per cent.
 
According to figures published by the German Federal Statistical Office, Germany exported around 1.3 million tonnes of biodiesel in the first half year of 2022. By contrast, imports amounted to 755,539 tonnes. The Netherlands, the principal EU marketplace for biodiesel, continued to be the primary trading partner, accounting for 40 per cent and 48 per cent of total exports and imports respectively. Imports more than doubled after having declined considerably in the previous year. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), larger shipments also came from Belgium, Malaysia and Poland. Whereas imports from Belgium also more than doubled, imports coming directly from Malaysia decreased around 17 per cent.

The main recipient countries of German biodiesel also were EU countries (76 per cent), headed by the Netherlands, Belgium and Poland. The most important non-EU country was the USA. The country took fourth place in the first half of 2022, partly because imports increased 28 per cent year-on-year to just below 91,000 tonnes.
 
In view of the trade surplus, the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) e. V. has pointed out that along with the volumes of biodiesel, potential for climate change mitigation in the transport sector is also exported. The fruit couldn't be hanging any lower to use it to close the gap recently identified by the Federal Government's Climate Council. The fact that even the Federal Ministry for the Environment is unable to propose immediately effective measures underlines that there is no alternative to biofuels, especially those that are physically available. The speed limit is far from sufficient. The electrification of transport as a consequence of e-mobility and thermal pump funding would only shift greenhouse gases emissions to the power sector, especially because more coal-fired power plants would have to be recommissioned to secure supply. The UFOP has underlined that in the end, climate protection would be the loser.

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EU legume harvest to be standard

EU output of legumes from the 2022 crop is expected to exceed the previous year's figure by 4 per cent but remains in line with the average of recent years. Field peas and field beans are set to see the biggest increase.
 
The EU Commission has estimated the EU harvest of legumes at just less than 6.2 million tonnes in 2022. This would be up 4 per cent year-on-year but remain short of the 6.9 million tonne record harvest of 2017. Above all, the harvests of field peas and field beans, at 2.1 and 1.3 million tonnes respectively, are each seen to grow 13 per cent over the previous year. According to Agrarmarkt Informations-Gesellschaft (mbH), the increase is due to both the expansion in area planted and a presumed growth in yields.
 
The most important legume crop in the EU-27 remains soybean, which accounts for a slightly lower share of 42 per cent of the legume crop. Farmers are likely to harvest around 2.6 million tonnes in 2022, approximately 2 per cent less than the previous year. Nevertheless, the long-term average will presumably be missed by 4 per cent despite an expansion in area planted with soybeans, because heat and drought have significantly reduced yield potential. The biggest decline is expected for sweet lupins. At 264,000 tonnes, the harvest is seen to fall 18 per cent short of the previous year's level. Again, the decrease is mainly due to an expected significant drop in yields.
 
The UFOP has emphasised that the production area and output of grain legumes are basically on an upward trend. This growth in legume crops underlines farmers' interest in opening up new markets and making crop rotation systems more resilient and less risky in view of climate change. The UFOP has called on the German Minister of Agriculture, Cem Özdemir, to make the accompanying and incentive measures sufficiently attractive to support this positive development. According to the association, the toolbox is in place and all that is needed is a forward-looking bold approach. The UFOP has renewed its call for an adequate premium scheme in the first and second pillar of grain legume production in varied crop rotation systems, as well as demanding adequate funding of the protein crop strategy of the German Federal Ministry of Food and Agriculture (BMEL). Both schemes are important "guidelines" for a future arable farming strategy that deserves the name and is also appreciated by consumers.

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Oilseed meal prices continued at high levels

Whereas demand for spot rapeseed meal was only sporadic, interest in longer-term futures was clearly stronger.
 
Supply on the rapeseed meal market was more than adequate due to the abundant rapeseed harvest. However, such supply contrasted with dwindling demand, especially for nearby positions. By contrast, deliveries from November 2022 onwards attracted greater buying interest and were valued higher than September deliveries. August 2022 wholesale prices were consistently stronger and not only up, on average, 10 per cent on the previous month, but also 37 per cent higher than August 2021 prices. At the beginning of September 2022, spot commodity weakened. Agrarmarkt Informations-Gesellschaft (mbH) reported an average price of EUR 325 per tonne ex mill on 8 September 2022. By contrast, rapeseed meal rose on further forward positions, which were valued at EUR 341 per tonne.
 
Prices for soybean meal also climbed significantly in August. On the one hand, they received support from unfavourable growing conditions in the US, the most important supplier on the world market. On the other hand, they were driven by rising energy costs and the resulting rising logistics costs in combination tow limited cargo space. Soybean meal containing 48 per cent crude protein was priced at on average EUR 585 per tonne fob mill in August 2022. This was up 3.1 per cent on the previous month's average and up as much as 45 per cent on the year-earlier level. Spot prices in Germany dropped as stock exchange prices for soybeans tumbled at the beginning of September 2022 due to raised US crop forecasts.
 

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More biodiesel consumed in the first half of 2022

In the first half of 2022, the use of biodiesel and hydrotreated vegetable oil for blending amounted to around 1.23 million tonnes. This translates to a 6.3 per cent rise on the same period 2021.
 
According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), demand for diesel increased 1.6 per cent to 15.15 million tonnes in this period. The average biodiesel/HVO incorporation rate between January and June 2022 was 7.5 per cent. The use of bioethanol amounted to 573,520 tonnes and thus exceeded the previous year's volume by just about 12 per cent. During the same period, consumption of petrol (E 5 / E 10) increased a good 7 per cent.
 
In June 2022, consumption of biodiesel declined 5 per cent on the previous month to 195,000 tonnes. This translates to a sharp decline of 8.7 per cent in the year-on-year comparison. The consumption of diesel reached 2.7 million tonnes in June 2022. This was up 14 per cent on the previous month, but nevertheless fell 6 per cent short of the previous year's volume. As a result, the incorporation rate dipped significantly to 6.7 per cent, a level below the half-year average and clearly below the rate of 8 per cent recorded in June 2021. The use of bioethanol continued to decline in June 2022. At 90,910 tonnes, consumption was down 3.4 per cent on the previous month. The use of bioethanol in blends decreased 5.6 per cent, but remained 2.8 per cent above the level seen in June 2021. On the other hand, the use in ETBE rose 18.3 per cent on the previous month. Nevertheless, it fell 31 per cent short of the previous year's volume.
 
The UFOP has pegged total sales of biodiesel and HVO at approximately 2.5 million tonnes in 2022. This corresponds to approximately 55 per cent of previous diesel fuel imports from Russia of approximately 4.5 million tonnes. The association expects demand for rapeseed oil-based biodiesel/HVO to increase in the fourth quarter, which would have a stabilising effect on prices. In the northern EU countries, rapeseed oil methyl ester is added to diesel in the winter half year to meet quality requirements for winter fuel. Also, from the beginning of 2023, palm oil-based biofuels (biodiesel/HVO) will no longer be credited towards GHG-quota obligations in Germany. Other member states, such as France, Sweden, Portugal, Belgium and the Netherlands, have also excluded palm oil from being counted towards quota obligations. This gap in demand will have to be closed with rapeseed oil, among other biofuel feedstock.
 

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Brazilian soybean crop set to hit record level in 2023

In view of the expansion in production area and positive harvest outlooks, Brazilian exports are likely to exceed the previous year's level significantly.
 
The USDA Foreign Agricultural Service (FAS) estimates the soybean production area for the 2022/23 crop year at 42.5 million hectares. This translates to a presumed increase of 1.6 million hectares on the previous year. In other words, the five-year growth rate of 1.2 million hectares will probably be exceeded by 400,000 hectares. According to the FAS, the regions bordering the virgin forests in the north and northeast of the country are particularly affected by the strong expansion in soybean area. Alongside expectations of buoyant world demand, the favourable exchange rate of the Brazilian real to the US dollar and the improved infrastructure as a consequence of new and enhanced roads and ports provide an incentive for farmers to expand their soybean areas, including on degraded pastures.
 
According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), based on an expected yield of 33.9 decitonnes per hectare, the soybean crop is set to reach a record volume of around 144 million tonnes, 17.4 million tonnes more than in 2021/22. The FAS raised its previous forecast after Brazil successfully secured sufficient amounts of phosphate fertiliser through extensive imports in the past few months. Brazil sources approximately 85 per cent of its fertiliser requirements from Russia and Belarus. Russia's invasion in Ukraine at the beginning of the year fuelled concerns over tight supply. In the first five months of 2022, however, Brazil raised its fertilizer imports 16.5 per cent on the same period in 2021. More specifically, imports between January and May 2022 amounted to 16.6 million tonnes, compared with only 14.2 million tonnes in the same period a year earlier.
 

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Global rapeseed harvest to reach new record high

With Russia and Australia anticipated to see a larger harvest, global 2022/23 rapeseed production will likely hit a new record. The USDA expects world rapeseed output to rise to a new record level of 82.5 million tonnes.
 
This would be up 2.2 million tonnes from the July estimate and up 14 percent over 2021/22. Above all, the rapeseed harvest estimate for Russia was raised. Russia's output is seen to hit a record at 3.9 million tonnes, which is up 1.1 million tonnes from the July forecast. The increase is mainly based on an expansion in area. The Australian rapeseed harvest will probably also be around 700,000 tonnes larger than previously expected, with 6.1 million tonnes currently forecast. Favourable growing conditions raised the yield potential and caused the USDA to make the adjustment. In the EU-27, the rapeseed harvest is likely to reach around 18 million tonnes, around 100,000 tonnes more than forecast in July.
 
With global consumption anticipated to amount to 79.2 million tonnes – 830,000 tonnes more than expected in July and 5.1 million tonnes more than in the previous season – there will be a 3.3 million tonne surplus for the first time in three years. For Russia and China, the USDA expects larger demand than previously forecast.
Given the presumably larger rapeseed production, global 2022/23 ending stocks are likely to increase significantly. At 6.8 million tonnes, the USDA not only sees stocks just less than 900,000 tonnes higher than in the previous month's estimate, but also up 47.5 per cent from the previous year's figure. These would be the largest ending stocks in three years.
 
The UFOP considers the estimated volume adequate to cover demand for all food and feed uses as well as biofuel production. German oil mills process approximately 10 million tonnes of rapeseed into 4 million tonnes of rapeseed oil per year.  The UFOP has pointed out that the current challenge is to secure the supply chain to ensure the commodity can be processed on time. The association is watching the low water levels in rivers with concern, and also the shift of transport to rail, which is increasingly reaching the limit of capacity. In view of the priority regulation the Federal Ministry for Economic Affairs and the Federal Ministry for Transport are currently coordinating, the UFOP has drawn attention to the fact that transporting rapeseed also means transporting an energy source that is already used for multiple energy applications. The association takes the view that in any case, in the face of climate change, the control of River Rhine water levels requires new concepts that are strictly future-oriented.

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EU trade in oilseeds and by-products, July 2022 and 2021 compared

According to information published by the EU Commission, foreign trade in rapeseed and sunflowerseed has changed, but less so than expected. The changes were triggered by the severe curtailment of the export potential of Ukraine, the primary supplier of oilseeds, oilseed meal and especially sunflower oil. As current information shows, volumes coming from Ukraine were larger than projected. In other words, there can be no talk of a general slump in shipments.

In July 2022, the EU-27 imported around 491,443 tonnes of rapeseed, whereas in the same month the previous year, only 286,826 tonnes came form third countries. Australia accounted for the largest share – around 78 per cent, or 381,164 tonnes. Ukraine followed in second place with 10 per cent, or just less than 50,000 tonnes, thus reducing its market share marginally by 2 percentage points over July 2021.

An exceptional rise was recorded for deliveries of sunflowerseed. Whereas in July 2021 the amount of EU-27 sunflowerseed imports was around 13,827 tonnes, it was up to around 259,895 tonnes in July 2022, 18 times the amount. Ukraine was the most important supplier with a market share of 93 per cent, followed by Moldova with 4 per cent. By contrast, European imports of sunflower oil saw a decline. According to latest information, the Union received around 126,033 tonnes in July 2022, down from 136,733 tonnes in July 2021. However, although imports fell short of the previous year's volume, the cut was nevertheless smaller than originally feared.

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Increase in EU sunflower area neutralised by poor yields

The war in Ukraine and the associated shortage of sunflower oil motivated many farmers in the European Union to sow more sunflowers in the spring of 2022. However, the initially positive harvest prospects cannot be sustained due to the dryness in many parts of Europe.

The continuing drought in Europe, especially in the eastern and south-eastern regions, prompted the EU Commission to drastically lower the harvest estimate for sunflowerseed. At the end of July, Brussels anticipated a volume of 10.5 million tonnes, 636,600 tonnes less than the previous month. This would be only 200,000 tonnes, or 1 per cent, more than in 2021.

Based on the estimated expansion in area to just less than 4.8 million hectares – which translates to an around 10 per cent rise on the year – crop expectations were very optimistic at first. The EU Commission assumed average yields to be at the previous year's level of 23.8 decitonnes per hectare. However, the absence of rain and persisting drought in many parts of Europe have dashed these expectations. The EU Commission is currently expecting yields in the amount of only 21.8 decitonnes per hectare.

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Unexpectedly good rapeseed harvest put pressure on prices

Due to increasing supply from the running harvest, spot prices came under growing seasonal pressure. In some regions, yields for wheat and rapeseed were surprisingly good, steadying the downward slide of producer prices. At the same time, low water surcharges and rail transport made delivery to the oil mills more expensive.
 
Uncertainties about Ukraine's shipping potential, the "weather market" in North America and the ongoing harvests in Europe led to strong fluctuations at the futures exchanges. According to Agrarmarkt Informations-Gesellschaft (mbH), the unexpectedly good rapeseed output provided scope for downward movements in price. After market participants had anticipated sharp declines in yield due to the continuing drought and heat, achieved yields have previously been a positive surprise. For example, according to the latest figures, French farmers harvested between 30 and 55 decitonnes of rapeseed per hectare from their fields. As a result, market participants were cautiously positive about rapeseed supply in the current crop year. In Germany, the rapeseed harvest was also progressing. In some locations, it was already complete. Yields were good to very good at 35 to 45 decitonnes per hectare with up to 5.5 per cent moisture content. According to initial reports, the oil contents are between 43 and 45 per cent, which is also more than satisfactory. In some regions, harvest operations were occasionally interrupted by rain and storms, but were quickly resumed afterwards.
 
In contrast, demand was very low as processors were stocked up well via contracts. In other words, the prices shown do not reflect producers' actual selling or contract prices. However, some effort is currently needed to avoid supply gaps caused by limited freight options. Low water levels have made river transport to the inland ports much more difficult. Cargo space has been scarce and expensive, especially as high energy prices are driving transport costs anyway.
 
Producer prices were lowered once again in Germany in calendar week 30. They averaged EUR 610.50 per tonne, which was down EUR 39.20 per tonne week on week. Prices reported by the individual German states ranged from EUR 555 to EUR 675 per tonne.

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German rapeseed meal exports in steep decline

German rapeseed meal exports fell 22 per cent short of the previous year's record volume. Main buyers, such as the Netherlands, Spain and France, imported considerably less, whereas Denmark, Finland and Switzerland ordered more.
 
According to information published by the German Federal Statistical Office, Germany exported a total of just over 1.5 million tonnes of rapeseed meal from July 2021 to May 2022. This was down 22 per cent on the same period a year earlier. It was also the smallest volume in three years. On the one hand, the decline was due to lower availability. Production at German oil mills dropped 5.5 per cent to 4.8 million tonnes in the above-mentioned period, which limited the country's export potential. On the other hand, the comparatively strong market prices curbed buying interest from abroad. From October 2021 to May 2022, protein in rapeseed meal was higher priced than, or at the same level as, protein in GMO-free soybean meal. In countries where GMO-free feedstuff is not a major concern, buyers therefore went for soybean meal rather than the alternative.
 
Most German rapeseed meal was delivered to the EU member states (around 1.45 of the 1.55 million tonnes). The largest share, 660,000 tonnes, went to the Netherlands. This means that the volume decreased almost one third compared to the same period a year earlier. Rapeseed meal deliveries to France slumped almost two thirds and exports to Spain plummeted 56 per cent. Due to larger domestic rapeseed harvests, both countries had less demand for rapeseed meal deliveries from abroad.
 
By contrast, according to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), supplies to Denmark, Finland and Austria saw significant increases. Denmark, the second largest trading partner in the rapeseed meal business, nearly doubled its imports from Germany to 193.000 tonnes. Switzerland was once more the most important recipient outside the European Community, boosting its imports as much as 82 per cent to 70.000 tonnes.
 
The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has stated that the fact that German oil mills have a processing capacity of approximately 9 million tonnes of rapeseed means that Germany is the EU-27's most important processor and supplier of GM-free rapeseed meal.
 
The association has pointed out that supply of this domestic feedstuff, which is firmly established in dairy cow feeding, is at risk if the Federal Ministry for the Environment implements plans to sharply lower the upper limit for biofuels from cultivated biomass and/or ban their being credited toward climate change commitments in the future. The UFOP has emphasised that only in combination with rapeseed processing to make biodiesel will supply of domestic feed protein be secured in the future.

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Australia is the EU's primary rapeseed supplier in 2021/22

At 5.3 million tonnes, EU-27 rapeseed imports from non-EU countries fell just less than 500,000 tonnes short of the previous year's volume. Canada, the main supplier, lost much of its importance due to a small harvest. By contrast, Australia increased its market share considerably. However, the rise was not big enough to offset the decline in deliveries from Ukraine.
 
Although the EU rapeseed harvest was somewhat larger in 2021 than 2020, total supply in the EU-27 in the 2021/22 marketing year – estimated at 22.8 million tonnes – was around 1.2 tonnes smaller than that in the 2020/21 marketing year. The drop was due to lower beginning stocks. Demand from oil mills was initially covered by EU production. However, starting in the first half of the marketing year, the rapeseed volumes required to utilise the mills to their full capacity increasingly had to be imported from Australia, Ukraine and Canada.
 
According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), Canada's 2021/22 shipments of 611,300 tonnes were down around 71 per cent on 2020/21 due to the smaller supply that resulted from the drop in rapeseed harvested. This means that the share of Canadian origins in total imports dropped from 32 per cent in 2020/21 to merely 11 per cent, whereas deliveries from Australia surged 45 per cent to 2.9 million tonnes. In other words, the share of Australian commodity in total imports increased 19 percentage points to 53 per cent.
 
Another reason for the strong increase in Australian shipments was the Russian invasion in Ukraine at the end of February. Until the war started, the European Union imported around 1.6 million tonnes of rapeseed from Ukraine each year and Ukraine's share in EU imports amounted to just less than 50 per cent. In view of blockaded ports, however, exports from the Black Sea region stopped in the weeks that followed. As a result, Australia became more and more important as a supplier, and producer prices soared to record levels. Only small volumes of rapeseed left Ukraine also in the months that followed. In the 2021/22 marketing year, Ukrainian deliveries totalled just less than 1.7 million tonnes. This compares to 2 million tonnes a year earlier.

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