Lack of demand remains key market driver for rapeseed
Cooler, wetter weather in the UK has brought some welcome relief to crops which, as a result, has brought out a few sellers. However, the UK will still need to import substantial quantities of rapeseed into the UK next season.
For 2019, rapeseed markets were mainly supply driven but, since the Covid-19 crisis, we've seen the collapse in demand for mineral oils and rapeseed oil as a result of the lockdowns imposed on industries that would ordinarily need these products. Typically, in the EU, 60% of the demand for rapeseed oil goes into biofuels, with the rest into the food service industry.
Markets have therefore been focussed on demand, or rather lack of it, and as a result we are seeing a much larger than expected carry out of rapeseed and rapeseed oil from 2019/20 into the new season. Harvest is approaching and, while the supply story in the EU has not gone away, it is not currently the main market driver. On paper, the EU has a big import requirement and large exporters of rapeseed/canola will again be looking to move significant quantities into the EU at harvest. This means supplies from the Black Sea in July/August followed by Canada and Australia in the last quarter of 2020.
EU rapeseed crops will likely be lower year-on-year, but at the moment so is demand. A return to pre-Covid 19 levels could see rapeseed markets buoyant once again, but this could take time.