Chart of the week (47 2022)
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.
Chart of the week (46 2022)
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.
Chart of the week (45 2022)
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.
Chart of the week (44 2022)
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.
Chart of the week (43 2022)
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.
Chart of the week (42 2022)
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.
Chart of the week (41 2022)
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.
Chart of the week (40 2022)
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.
Chart of the week (39 2022)
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.
Chart of the week (38 2022)
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.
Chart of the week (37 2022)
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.
Chart of the week (36 2022)
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.
Chart of the week (35 2022)
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.
Chart of the week (34 2022)
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.
Chart of the week (33 2022)
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.
Chart of the week (32 2022)
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.
Chart of the week (31 2022)
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.
Chart of the week (30 2022)
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.
Chart of the week (29 2022)
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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