The global rapeseed oil market is experiencing a downturn, with prices decreasing over the past few weeks, and market participants are weighing in on the various factors contributing to this decline.
As of October 25, 2023, the MATIF price for rapeseed stands at €412 per metric ton (mt) or $436 per mt, down from €426 or $450 per mt on October 13, 2023. Similarly, the Vesper West E.U. Forward Price Index for crude rapeseed oil, as of October 25, sank to €900 or $954 per mt (FOB, Jan contract) from €955 or $1005 per mt on October 13, 2023.
Canadian canola harvest
One significant factor contributing to the price decrease is the completion of the Canadian canola harvest, while there is a slowdown in farmer selling. As a result, commercial stocks have decreased by approximately 10% compared to the previous year.
The USDA estimated the Canadian canola crop at 17.8 million metric tons (mmt) in its latest report, a slight decrease from the earlier estimate of 18.2 mmt. Meanwhile, Stats Can is estimating the Canadian canola crop at 17.37 mmt.
According to our sources, market participants have identified several factors contributing to the decline in rapeseed oil prices. These include lower energy prices, a weaker Euro (EUR), and a drop in the soy complex market.
“I think the RSO was partly overpaid in the last couple of weeks. The RME margins plummeted, affecting both mineral oil sales and the observed spread. Besides, it seems that the soybean yields in U.S. are not that bad as shown in the last USDA report,” said one Germany-based rapeseed oil trader.
Lower demand for diesel and biodiesel
Another factor contributing to the downward pressure on global rapeseed prices is the reduced demand for diesel and biodiesel. This decreased demand has had a cascading effect, causing a decline in RME prices, which in turn has impacted the prices of rapeseed.
The Vesper Spot Outright Index FOB ARA for RME, as of October 25, dropped to $1158 per mt from $1309 per mt on October 13, 2023.
A representative from Shell noted, “The demand for diesel and biodiesel in the Western E.U. is lower due to the economic weaknesses. Purchasing will probably be minimal for the rest of 2023.” While another market participant added, “Current price developments in the mineral oil markets are mainly sentiment-driven”.
Read more on the global vegetable oil market in our latest Vesper Highlights