Chart of the week (15 2021)

EU legume production is growing at a low level

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The Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) sees the EU Commission's current estimate of the area planted to grain legumes for harvest in 2021 as confirmation of its expectations that the cultivation of protein plants continues to receive inadequate funding policy support, considering the existing potential of domestic protein supply and improvement of the GHG balance and biodiversity in arable farming. Consequently, for many European agriculturists, these crops are still not an economically attractive option. The legume area for the 2021 harvest has been expanded 3 per cent in the EU-27. The increase was due to the growth in area planted to feed peas, soybeans and field beans.

The area of land dedicated to legume production in the EU-27 has been expanded approximately 3 per cent to 2.5 million hectares for harvest in 2021. The UFOP has critically observed that, although this would be the largest area in four years, it is nevertheless a disillusioning trend. Soybeans take up the largest area, as they did the previous year. At 965,000 hectares, they account for just less than 40 per cent of the legume area. This translates to a 3.2 per cent rise in soybean area year-on-year. According to Agrarmarkt Informations-Gesellschaft (mbH), this would be a new record. The EU Commission sees feed pea production up 3.3 per cent at 866,000 hectares. Field beans were sown on a 3.1 per cent larger area of around 459,000 hectares. Only the sweet lupin area, at 169.000 hectares, is down at around 2.3 per cent of the previous year's figure.

The volume of the 2021 harvest will also likely be larger due to the expansions in area planted to soybeans, feed peas and field beans, but this will depend on the weather conditions over the next few weeks. As things stand at present, the soybean harvest could increase 10 per cent year-on-year to 2.9 million tonnes. Whereas, according to the EU Commission, the harvest volume of feed peas could rise 6 per cent to 2.2 million tonnes and that of field beans 1 per cent to 1.2 million tonnes, sweet lupins are seen to decline around 9 per cent to 227,000 tonnes.

The UFOP has made it clear that the success of the EU Commission's "Farm to Fork" strategy will be reflected in how the production areas of these crops are going to develop, because the Commission rightly made the creation of regionality and local added value a central aspect of its strategy. Depending on site conditions, grain legumes are a key crop to complement crop rotations for more sustainability and climate resilience.

Along with rapeseed and sunflowers as additional flowering plants, these crops contribute to improving biodiversity due to different flowering times and through soil enrichment with humus and carbon. The reduction of nitrogen applications due to the nitrogen fixation capacity of grain legumes is another factor that actively contributes to protecting the climate. Also, the cultivation of grain legumes contributes to producing domestic GM-free feed and/or food protein, thus cutting the need for protein imports from non-EU countries.

The UFOP therefore expects that the comprehensive ecosystem service approach will find its way into the aims of the agricultural strategy of the German Ministry of Agriculture. UFOP considers this to be a necessary requirement for ensuring that locally adapted crop rotation systems can also contribute to economic sustainability on arable farms. However, the association has pointed out that, in the end, consumers decide at the point of sale whether, and to what extent, extended crop rotation systems that provide the desired ecosystem service are also rewarded.

 

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Chart of the week (14 2021)

Larger global rapeseed harvest expected for 2021/22

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According to the latest estimates of the International Grains Council (IGC), slightly more rapeseed will likely be harvested worldwide in the upcoming crop year. Consumption is seen to remain virtually unchanged.

The ICG has forecast that the world's four largest rapeseed producers, Canada, the EU, China and India, will harvest more rapeseed in the 2021/22 crop year than the previous year. According to the IGC estimate, global rapeseed production will presumably rise from 70.4 million tonnes in 2020/21 to 72.8 million tonnes in 2021/22. The IGC outlook is based on a 2 per cent increase in area planted, but also on yield increases. At 72.9 million tonnes, global rapeseed consumption is seen to decline marginally compared to the previous year due to strong demand in Asia and Europe. However, it is set to remain at a high level.

Prospects for a bounceback in global rapeseed supply in 2021/22 appear to be poor considering the expected low level of beginning stocks and moderate growth in production. 2021/22 ending stocks are therefore forecast at the previous year's level of 3.6 million tonnes. Stocks of the three big exporters, Australia, Canada and Ukraine, are anticipated to shrink to 1 million tonnes (from 1.2 million tonnes the previous year). This is mainly due to the decline in stocks in Canada.

Prospects for world trade in 2021/22 (October to September) will ultimately fundamentally depend on demand from the EU-27 and key buyers in Asia, including China, Japan and Pakistan. Harvest volumes in the EU-27 are seen to remain tentatively stable at 17.3 million tonnes in the 2021/22 crop year. Agrarmarkt Informations-Gesellschaft (mbH) has underlined that an expansion in area planted in the EU is the main prerequisite for improving supply to the European oil mills.

 

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Chart of the week (13 2021)

Canadian canola oil exports to the EU increased

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Canada exported more canola oil in 2020 than in previous years. As usual, the largest volumes went to the US and China, but the EU-27 also reappeared as a buyer.

Canadian canola oil exports reached just less than 3.4 million tonnes in the calendar year 2020. This translates to an increase of 7 per cent on the previous year and of no less than 13 per cent compared to the five-year average. The main reason for this growth was strongly rising demand from Chinese importers, which demand surged 26 per cent to 1.1 million tonnes compared to 2019. However, China's demand fell 5 per cent short of the level seen in 2018. The US bought a smaller volume than the previous year but remained the number one recipient country with imports amounting to 1.7 million tonnes. South Korea, Chile and Mexico were other important purchasers.

At 48,200 tonnes, the European Community ranked sixth most important destination. This is remarkable, because the EU had not purchased a single tonne of canola oil from Canada in the previous two years. According to Agrarmarkt Informations-Gesellschaft (mbH), the small rapeseed harvest in the EU-27 pushed up interest in buying feedstock and by-products from non-EU countries. At the same time, attractive world market prices likely motivated Canadian canola oil suppliers to export the commodity.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has pointed out the supply risks associated with this purchasing policy, also in view of potential government interventions in exports. Also, major rapeseed supplying countries, such as Ukraine and other East European countries, have been affected by weather extremes with the result that the supply risk has increased over recent years. The UFOP has therefore recommended that processors secure their feedstock supply to the greatest extent possible already at the time the next rapeseed sowings are made. The association believes that the agricultural trade is in a key position to arrange the appropriate contracts.

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Chart of the week (12 2021)

More imported rapeseed processed

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The share of foreign rapeseed in rapeseed processing by German oil mills was at the highest level ever in the first half of the 2020/21 season. This was despite the fact that feedstock availability had increased due to the larger 2020 rapeseed harvest.

In the first half of the 2020/21 crop year, German oil mills processed around 4.8 million tonnes of rapeseed. This was up 5 per cent year-on-year and also the largest processing volume in four years. In recent years, the volume of domestic rapeseed processed by German oil mills has decreased more and more. In the first half of the 2020/21 season, just over one third of the rapeseed processed came from Germany. This compares to more than 40 per cent in the year-earlier period. It is four years since the ratio of a domestic and imported rapeseed was in balance. In 2016/17, German rapeseed even accounted for the slightly larger share of 52 per cent.

The share of imported rapeseed in the oil mills' feedstock base has never been bigger than in the first half of the current crop year. This seems paradoxical in some respects, as Germany's 2020 rapeseed harvest, of around 3.5 million tonnes, was larger than the previous year's harvest (2.8 million tonnes). According to Agrarmarkt Informations-Gesellschaft (mbH), these figures show that the domestic share in rapeseed supply to German oil mills is not a question of the domestic harvest alone. The price is a key factor too, and offers from abroad were obviously quite attractive for processors in Germany.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has pointed out the supply risks associated with this purchasing policy, also in view of potential government interventions in exports. Also, major rapeseed supplying countries, such as Ukraine and other East European countries, have been affected by weather extremes with the result that the supply risk has increased over recent years. The UFOP has therefore recommended that processors secure their feedstock supply to the greatest extent possible already at the time the next rapeseed sowings are made. The association believes that the agricultural trade is in a key position to arrange the appropriate contracts.

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Chart of the week (11 2021)

FAO global vegetable oil and cereal price indices rose sharply

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Firm prices on the international markets for palm, soybean, rapeseed and sunflower oil drove up the FAO price index for vegetable oil. The Cereal Price Index also increased strongly.

Both the FAO vegetable oil index and the cereal price index have risen sharply since mid-2020. The FAO's vegetable oil price index illustrates the changes in international prices of the ten most important vegetable oils in world trade. It reached 147 points in February 2021, which translates to a rise of around 6 per cent month-on-month and is the highest level since April 2012. The index has nearly doubled since May 2020. The sharp rise was sparked by the continued strong prices for palm, soybean, rapeseed and sunflower oil. Palm oil prices increased the ninth month running in February, driven by concerns about declining stocks in major export countries.

Prices for soybean oil also continued to grow in the past month. Support came from slow soybean harvest operations in Brazil and the associated reduction in supply. Meanwhile, rapeseed and sunflower oil benefited from limited export supplies from the Black Sea region in the 2020/21 season and modest production prospects in the EU for 2021. Prices were also driven by firm crude oil prices.

The FAO cereal price index is based on international export market prices for wheat, maize, barley, sorghum and rice. The February 2021 index averaged 126 points, which was up 1 per cent month-on-month and up 30 per cent over mid-2020. Feed grain prices showed the strongest growth, driven by the boom in demand in China. Wheat remained virtually unchanged in February, with January prices already having been up just less than 20 per cent year-on-year due to keen buying interest. Demand for rice locally also exceeded supply.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has welcomed the price trend in the vegetable oil and oilseed markets as a fundamentally positive and overdue development in view of the low-price phase of recent years. The association has underlined that higher producer prices are necessary to compensate for the competitive disadvantage resulting from tighter regulations on the use of fertilisers and crop protection products and that they are also needed as an economic incentive. The UFOP has emphasised that attractive producer prices also lead to an expansion in cultivation area and therefore safeguard feedstock supply to oil mills. It is critical of the fact that the share of imports has risen steadily over recent years, whereas the crop rotation potential in Germany and the EU has not been exploited. More specifically, the cultivation of rapeseed and the options for its use for food, fuel and feed are a perfect example of the short supply chains addressed in the "Farm to Fork" strategy. Also, the extensive sustainability certification is a unique benefit of rapeseed cultivation. The UFOP has stressed that in Germany, the entire rapeseed harvest is certified, recorded and marketed.

 

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Chart of the week (10 2021)

Rapeseed prices at multi-year high

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Limited supply of rapeseed both in Germany and abroad continued to drive prices up. Rapeseed prices in Germany have been on the increase almost continuously since the crop year began. In February 2021, their rise was especially sharp.

Whereas at the end of January, the price was reported at EUR 411 per tonne free to warehouse, it was up to EUR 469 per tonne only five weeks later. Such a strong price increase has not been witnessed in the past decade. There is no end in sight for soaring rapeseed prices.

Agrarmarkt Informations-Gesellschaft (mbH) has reported that the price surge was caused by tight supply. At the same time, prices were supported by firm prices for canola in Canada and for soybeans in the US and, above all, by the rise in crude oil prices in New York. Rapeseed prices in Paris have increased just less than 17 per cent since the beginning of February.

However, despite the firm prices new business was hardly ever done. The reason was thinned stocks in producers' hands. Producers had already divested themselves of their stocks over the three previous months. Also, supplies were not very extensive this season due to the moderate harvest. Remaining quantities were held back in speculation on further price increases. Also, hardly any supply contracts were concluded for the 2021 rapeseed crop. Marketing progress was far ahead of the usual level. Producers are now taking a low profile, waiting to see how the crops are going to develop, because they have to allow for yield risks until the harvest. No one wants to run the risk of being unable to deliver commodities they contracted.

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Chart of the week (09 2021)

2020 biodiesel sales hit record high

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At approximately 3.025 million tonnes, the incorporation of biofuels in diesel fuel blends reached its highest level in the past year since the quota regime was introduced in 2007. In providing this information, the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) e.V. refers to statistics published by the Federal Office for Economic Affairs and Export Control (BAFA) at the beginning of this week. The UFOP sees this as confirmation of its expectations that the GHG reduction target, which was raised from 4 to 6 per cent for 2020, would be easy to meet. The adequate availability of hydrotreated vegetable oil (HVO) played an important role in this.

UFOP: raise GHG emissions quota to 6.5 per cent already in 2021

The diesel fuel standard DIN EN 590 limits the incorporation rate of fatty acid methyl ester (biodiesel) to a maximum of 7 per cent by volume. According to the standard, HVO can be blended at up to 26 per cent. The UFOP has estimated the share of biodiesel in fulfilling the quota requirements at approximately 2.46 million tonnes and that of HVO at approximately 0.56 million tonnes. The association has pointed out that quota requirements were easily met despite the fact that quotas could not be carried over to 2020 from previous years. These and other options to meet the quota obligations can and will be applied in 2021. Against this background, the UFOP has called for the quota on GHG emission to be raised to 6.5 per cent this year already. From 2022 onwards, more ambitious increases are possible and urgently needed in the interests of climate protection, the UFOP has emphasised referring to the opinion of the Bundesverband Bioenergie (BBE), the German Bioenergy Association, on the Federal Government's draft bill for the future development of the greenhouse gas reduction target.

The UFOP has strongly underlined the need for action to stop the use of palm oil in biofuels production and for credits towards the cap on greenhouse gas emissions. This step would raise the domestic and European feedstock potential instead of promoting exports of rapeseed oil-based biodiesel. The UFOP therefore welcomes the fact that the German government is making use of the authorisation in the EU Commission's Delegated Regulation (2019/807) to cease giving credits for palm oil-based biofuels from 2026. However, France and Austria are showing that palm oil can be excluded today, much earlier than the German government has planned.

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Chart of the week (08 2021)

German biodiesel exports hit a new high

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With exports amounting to approximately 2.33 million tonnes and an export surplus of approximately 0.9 million tonnes, Germany underlines its importance for the production and marketing of biodiesel in the European Union. This has been stated by the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) with reference to current official statistics. German biodiesel imports totalled approximately 1.45 million tonnes. The Netherlands were once more the by far most important recipient and exporting country, with approximately 1 million tonnes and 0.7 million tonnes respectively. In the calendar year 2020, Germany imported and exported more biodiesel than ever before.

According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), larger import volumes also came from Belgium, Malaysia and Poland. The growth in imports from France is especially noticeable. At 74,000 tonnes, the country more than tripled its biodiesel shipments to the German market year-on-year. Whereas imports from the Netherlands declined approximately 2 per cent to 700,000 tonnes, those from Malaysia dropped around 9 per cent to 139,000 tonnes. Germany supplied a record quantity of 955,000 tonnes to the Netherlands in 2020. This translates to a 12 per cent rise on the year. German shipments to Belgium accounted for 15 percent of total exports in 2020. The country imported around 356,000 tonnes. This was up around 35 per cent year-on-year.

The UFOP has pointed out that the statistics published take into account exclusively biodiesel. Hydrotreated vegetable oil (HVO) is not included. In this context, the UFOP has emphasised the urgent need to adjust the information published in the official statistics. According to the association, as a consequence of the increasing importance of HVO, biodiesel and HVO data should be captured and listed separately to facilitate greater market transparency. The reason given is that biodiesel and HVO are different fuels, each with its own specific fuel standard.

The next Evaluation and Progress Report of the Federal Office for Agriculture and Food will show which quantities of biodiesel and HVO – listed by feedstock type and origin – were actually credited towards the 6 per cent GHG reduction target in 2020. The UFOP expects the report to be published at the end of October 2021.

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Chart of the week (07 2021)

Increased rapeseed production reduces import demand

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EU-27 rapeseed production in 2020/21 exceeded the previous year's output. Consumption is estimated lower, leading to reduced import demand. Nevertheless, ending stocks are expected to grow.

According to information published by the EU Commission, the rapeseed harvest in the EU-27 was slightly larger in 2020 than in 2019. It is pegged at 16.1 million tonnes, which translates to a rise of just less than 5 per cent compared to 2019. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the climb is a result of harvest increases in Germany, Poland, Lithuania and the Czech Republic. It more than offset production declines in other member states. Nevertheless, the result is once again short of the average harvest figure.

2020/21 consumption in the EU-27 is estimated at 21.2 million tonnes, which translates to a decline of 4 per cent year-on-year. The somewhat higher output and lower demand will likely cause the gap between production and consumption to narrow somewhat in 2020/21. A year earlier, 70 per cent of EU consumption was covered by European production. In 2020/21, the share will presumably be 76 per cent. For this reason, the EU Commission expects that compared to the previous crop year, less rapeseed will have to be purchased from third countries. Imports are estimated at 5.5 million tonnes, which would be an 11 per cent drop. According to AMI estimates, the EU-27 has already imported approximately 70 per cent of the expected import volume this crop year.

EU ending stocks are likely to reach approximately 0.8 million tonnes. This would translate to an increase of about 60 per cent – but compared to a previous year with very low ending stocks.

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Chart of the week (06 2021)

CO2 emissions declined only in a few countries

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The Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) has emphasised that the European Union is set to live up to its leadership role in protecting the climate and must therefore push on climate protection on an international scale. The EU's CO2 emissions declined 25 per cent compared to 1990. By contrast, greenhouse gas emissions in China, India and Indonesia rose more than 24 per cent. Against this background, the next Climate Change Conference (COP26) will be held in Glasgow at the end of 2021. Warning that time is running out to protect the climate, the UFOP has called on the signatory countries to the Paris climate agreement to produce their climate protection strategies for the period up to 2050 now.

The UFOP has pointed out that the increase in global fossil CO2 emissions observed in the years 2017 and 2018 continued in 2019, if at a slower rate. The EU Commission's in-house Emission Database for Global Atmospheric Research (EDGAR) has shown that the EU and Russia were the only industrial regions with CO2 emissions clearly (around 25 per cent) below those of 1990. Over the same period, CO2 emissions in the US and Japan rose 0.8 per cent and 0.4 per cent respectively, whereas CO2 emissions released into the atmosphere by the emerging economies of China and India were 3.8 and 3.3, respectively, higher compared to 1990 due to their rapid industrialisation in the past two decades. However, the database records only the world's fossil CO2 emissions from anthropogenic activities, i.e. those generated by using fuels such as mineral oil, coal or natural gas. It does not cover CO2 emissions from biomass burning, changes in land use (clearing primeval forest/grassland, release of methane from permafrost soils) or forestry.

Since the beginning of the 21st century, global greenhouse gas emissions have increased compared to the three previous decades. This was mainly due to the growth in CO2 emissions in emerging markets. The latest EDGAR estimates confirm that this trend continued in 2019, with global anthropogenic fossil CO2 emissions rising 0.9 per cent on 2018 and reaching a volume of 38 gigatonnes of CO2-eq.

In 2019, the world's biggest CO2 emitters – China, the US, India, the EU-27 plus UK, Russia and Japan – accounted for 51 per cent of world population and 62.5 per cent of the global gross domestic product (GDP). At the same time, they were responsible for 62 per cent of total global fossil fuel consumption and 67 per cent of global fossil CO2 emissions. Greenhouse gas emissions developed differently between these countries in 2019 compared to 2018. The biggest increases were recorded for China and India, whereas the largest decline was identified for the EU-27 plus UK at 3.8 per cent.

 

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Chart of the week (05 2021)

Brazil expects bumper soybean crop

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Brazil and Argentina are set to maintain their shares in the global soybean market this crop year. Whereas Argentina is expected to harvest slightly fewer soybeans, Brazil is anticipated to bring in a larger crop.

Brazil, the US and Argentina are the largest soybean-producing countries worldwide. Together, they produce more than 80 per cent of the world's soybeans. India follows a long way behind. The country will likely harvest around 3 per cent of global soybeans in 2020/21.  According to an USDA report, Brazil is set to harvest a record soybean crop of 133 million tonnes in the current crop year, which would be up around 7 million tonnes from the previous year. The drought-related planting delays at the end of 2020 appear to cause delays also in harvesting, but, according to the USDA, are unlikely to lead to reductions in yields. Brazil is consolidating its number one position ahead of the US based on a 1.7 million hectare expansion in area planted. In the US, the soybean harvest was already complete at the beginning of November 2020. It amounted to around 113 million tonnes. This translates to a rise of 16 million tonnes year on year.

In Argentina, the world's third largest producer of soybeans, the harvest is expected to be lower the second year running, at 48 million tonnes. The reason is poor weather conditions. Not only did drought hamper plantings, but it also worsened growing conditions. Consequently, according to investigations conducted by AMI (Agrarmarkt Informations-Gesellschaft mbH), yields are expected to be lower, whereas the area planted remained at the same level.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has stated that, according to AMI, the increase in soy output in Brazil is due to an expansion in area. Due to lack of statistical data, the association is unable quantify or locate the expansions. The envisaged policy of deforestation-free imports would require a proof of origin for soybeans harvested from these growing areas. However, the UFOP has pointed out that this requirement would just displace but not solve the issue of deforestation.

 

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Chart of the week (04 2021)

World harvest of dry peas increased

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Whereas Canadian farmers likely harvested more dry peas in the current crop year, farmers in other key dry pea-producing countries recorded sharp declines, which were substantial in some cases. However, the global dry pea harvest is set to be larger than the previous year because increases outweigh declines. This is the assessment Agrarmarkt Informations-Gesellschaft (mbH) has made on the basis of information published by the International Grain Council (IGC).

The International Grain Council (IGC) has forecast the world's dry pea harvest in the 2020/21 crop year at around 14.3 million tonnes. This would translate to a 0.3 million tonne rise from the previous year. The outlook is mainly based on higher harvest estimates for Canada, Russia and Australia. The harvest increase in Canada – the world's most important country of origin for dry peas – is estimated at 4.6 million tonnes, which would be up around 0.4 million tonnes from the previous year. Australian production is also seen to have risen by just less than one third to 300,000 tonnes due to higher yields. Despite reports of excessively dry growing conditions in Russia, the Russian dry pea crop in 2020 is forecast at 2.4 million tonnes. This would translate to a slight rise over the previous year's volume. In the EU-27, the dry pea harvest is seen to be up 0.1 million tonnes year on year at 2.1 million tonnes.

On the other hand, according to the IGC, the US and Ukraine saw a significant slump in harvest volumes. US production probably amounted to 0.8 million tonnes, falling 17 per cent short of the previous year's volume. In Ukraine the harvest volume is seen to have decreased around 12 per cent to 0.5 million tonnes. According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the decline is probably due to dry growing and harvesting conditions.

In view of the EU's large need for imports of feed protein, the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has emphasised that the large potential of the production of dry peas and other large-grain legumes such as field beans, lupins and soybeans could be tapped. According to the UFOP, farmers have been waiting in the wings for many years. The importance of these crops as flowering plants for biodiversity as well as nitrogen-fixers for climate protection – and, consequently, their contribution towards the ecosystem performance from extended crop rotation systems – is common knowledge, the UFOP has pointed out. In light of climate change and its consequences, the pressure to act and succeed is enormous now, the association has underlined, referring to the 1.5-degree target to be reached by 2030.  The UFOP has explained that grain legumes are an essential element to improve soil fertility, establish resilient crop rotations and increase soil carbon content. In this context, the association has drawn attention to the German Ministry of Agriculture's agricultural farming strategy. The aim of the strategy is basically to enhance the diversity of crops, taking into account progress in production technology, digitization and plant breeding that can already be leveraged today and also progress that will be made in future. UFOP has said that climate change and the need for economic competitiveness are the factors defining the framework of action and level of pressure to adapt.

 

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Chart of the week (03 2021)

U soybean imports from US dwindled

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Since the partial agreement was reached in the trade dispute with China, the US has ramped up soybean shipments to China. As a result, US imports to the EU tailed off. European demand is therefore increasingly covered by Brazilian soybeans.

 

EU oilseed production can only cover around 56 per cent of EU demand. Consequently, the EU-27 plus UK has always depended on oilseed imports from non-EU countries. Soybeans account for the largest share of oilseed imports, because soybean production in the EU is still relatively low. In the first half of the crop year 2020/21, the EU-27 plus UK imported around 7.1 million tonnes of soybeans. This was up approximately 5 per cent compared to last year's period and down around 2 per cent compared to two years earlier.

 

The biggest share of soybean imports – 2.9 million tonnes or 40 per cent – came from the US. Compared to the same period a year earlier, imports from the US declined by around 12 per cent. Compared to 2018/19, the decrease amounted to as much as 46 per cent. According to Agrarmarkt Informations-Gesellschaft (mbH), the reason for the considerable falloff in soybean shipments from the US is probably the partial settlement of the US-China trade dispute. Since China started to place plenty of orders with the US again, fewer US soybeans have been available for exports to the EU.

 

As a consequence, EU demand has been covered to a greater extent by soybean imports from Brazil. These imports amounted to around 2.8 million tonnes between July and December 2020. This was just about twice the amount of the previous year. The third most important supplier was Canada, followed by Ukraine and Serbia.

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Chart of the week (02 2021)

Soybean prices drove oilseed meal prices

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Soybean meal prices in Chicago strengthened considerably over the past several months, leading to a rise in soybean and rapeseed meal prices in the German spot market. At the same time, demand for GMO-free soybean meal was brisk.

Prices for rapeseed meal and especially GMO-free soybean meal increased significantly in the second half of the year 2020. At the beginning of the crop year, in July 2020, GMO-free soybean meal with 48 per cent crude protein still cost EUR 456 per tonne fob Hamburg. Six months later, it was up around EUR 146 per tonne at EUR 602 per tonne. This translates to a price of EUR 4.60 per protein percentage per tonne at the beginning of January 2021 compared to EUR 3.10 at the beginning of July 2020. The rise was sparked by sharp price increases in Chicago driven by concerns over drought-related harvest losses in South America. Also, supply of soybean meal in Argentina waned, fuelling concerns of potential supply bottlenecks in Germany. Supply in Brazil – the main supplier of GMO-free soybean meal – also tightened, because China literally swept the market over the past several months. Buyers were also seeking GMO-free soybean meal in other countries. As a result, the focus shifted to European produce, such as Danubian soy, which was yet another factor that added to the price rise.

Rapeseed meal has increased EUR 53 per tonne to EUR 278 per tonne since the beginning of the crop year. The is the equivalent of EUR 7.93 per percentage of protein per tonne compared to EUR 6.34 at the start of the season. In other words, rapeseed meal gained some competitive advantage against GMO-free soybean meal. The difference in prices for one percentage of protein in the above-mentioned oilseed meals recently amounted to EUR 4.52 per tonne, compared to EUR 2.89 per tonne on 01 July 2020 and EUR 2.59 per tonne a year ago.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has drawn attention to the large number of feeding trials the association has been supporting to establish the feed values for the various animal species. The current price development increases the competitiveness of using rapeseed meal as an alternative feed. This especially applies to cattle farming, because the difference in feed value compared to soybean meal only plays a minor role. Feeding trial results have shown that rapeseed meal produces analogous milk yields. The UFOP has said that for this reason, GMO-free rapeseed meal from EU rapeseed is the preferred source of protein for milk and dairy products that carry the green "GMO-free" label.

In view of the potential of rapeseed and, above all, grain legume crop production, UFOP believes that there is considerable substitution potential which, in the case of grain legumes, could be unlocked by intensifying research efforts. The UFOP has emphasised that the use of domestic sources of protein is a key prerequisite for the EU Commission's "Farm to Fork" strategy and would be part of a deforestation-free value chain based on regional aspects and transparency. 

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Chart of the week (01 2021)

Global rapeseed area set to increase

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Declines in area in Ukraine and the EU-27 plus UK will presumably be more than offset by area increases in other major rapeseed-producing countries in 2021/22.

According to recent information published by the International Grain Council (IGC), the global area planted to rapeseed is likely to reach 35.6 million hectares in the 2021/22 crop year. This would be a 1.4 per cent increase on the current crop year. Canada is expected to see the biggest rise in area. The country could produce rapeseed on around 8.7 million hectares for the 2021 harvest. This would translate to a 4.6 per cent rise on the year. However, these figures are strongly prognostic, because sowings will not be made until spring 2021. On the other hand, the comparatively low stocks in Canada and high rapeseed prices suggest that the Canadian rapeseed area could be expanded.

Farmers in other important countries where rapeseed is grown will probably also sow more rapeseed in 2020/21. These countries include India with an increase of 2.8 per cent to 7.4 million hectares and Russia with a rise of 1.1 per cent to 1.4 million hectares.

By contrast, according to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), the area planted to rapeseed in the EU-27 plus UK will decrease slightly by 0.1 million hectares to 5.5 million hectares. Although Germany and Poland are expected to see an expansion in area, such expansion will not suffice to offset the declines anticipated for France, Southeast Europe and the UK. The IGC expects a sharp decrease of 16.4 per cent to 0.9 million hectares for Ukraine as a result of excessively dry conditions at the time of sowing.

 

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Chart of the week (53 2020)

No rapeseed methyl ester means noticeably less rapeseed meal

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The German and European feed markets benefit significantly from the production of rapeseed-based biodiesel fuels. Rapeseed meal is generated as a joint product of oil production in this value chain, the Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) has explained. GM-free rapeseed meal is the most important source of protein for animal feeding in Germany. In future, extracted rapeseed meal could also play an important role for the human diet, UFOP has underlined, referring to research projects the association supports.

Germany is the main EU country for rapeseed processing, with around 9.0 million tonnes of rapeseed processed in 2019. This production generated just less than 3.8 million tonnes of rapeseed oil and just less than 5.2 million tonnes of rapeseed meal. Because in Europe, rapeseed varieties are exclusively bred without genetic manipulation (GM), and only licensed if bred without GM, the byproduct rapeseed meal is also GM-free. This fact encourages the use of rapeseed meal, especially in dairy feeding. Rapeseed meal can replace soybean meal completely without any loss in milk yield. Today, most milk and dairy products are labelled "without GM". The strong consumer demand for these products therefore supports regional production and processing of rapeseed – which is entirely in the interests of environmental and climate protection. At the same time, it reduces the reliance on imports of GMO soy and GMO soybean meal considerably. UFOP has calculated that 5.2 million tonnes of rapeseed meal are the equivalent of a soybean area of approximately 1.6 million hectares.

Whereas rapeseed meal has become a staple in animal feeding, sales of rapeseed oil are tied to its use in the biofuels market. The association has stated that supply of rapeseed oil by far outpaces the receptiveness of food markets (edible oils, convenience products). If future demand for rapeseed oil were to shrink because biodiesel is no longer counted as a contribution towards reducing greenhouse gas emissions in the transport sector, this would obviously have repercussions on rapeseed processing. In other words, two thirds of today's rapeseed meal production, approximately 3.4 million tonnes, would no longer be available. Imports of GMO soy would be needed to fill this gap. In purely arithmetic terms, this would translate to a soybean area of 1.1 million hectares in the past year. Consequently, sustained rapeseed cultivation in extended crop rotation systems with grain reduces the pressure on land in the countries of origin.

UFOP has contended that this effect is given too little attention in the current debate on the future biofuels policy. Instead, there are iLUC and "food-or-fuel" debates that don't draw on hard facts and from which policymakers should finally free themselves.

UFOP has expressly welcomed the protein plant strategy adopted by the European Union and German government. Rapeseed, by far the most important regional source of protein in the EU, is an absolute must in this strategy, UFOP has stressed. Complemented by grain legumes, rapeseed and sunflowers could ensure a more diversified crop rotation together with flowering plants. Biodiversity and soil fertility could be improved. This is why UFOP has called on policymakers to take a holistic view instead of hastily ruling out necessary land use options. UFOP has also directed this criticism at the Vice President of the EU Commission, Frans Timmermans, whose approach to implementing the Green Deal is leading to even more restrictions and competition-distorting conditions for arable farming. The association has called on the Vice President to take into account the general potential regional added value has for sustained arable farming. According to UFOP, sustainable biofuels from European production should be an integral part of this farming system.

 

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