Owing to unfavourable winter planting, and attractive cereal crop prices, the major EU rapeseed producing countries of France, Germany, Poland and the UK have reduced area for harvest 2019. Early estimates forecast the top four to see up to 15% reduction in the planted area. Meanwhile, the remainder of the EU-28 is forecast to have a smaller reduction in planted area, according to AHDB Market Intelligence.
As a result of that cut back in hectares, it is likely that EU oilseed rape production will be at a multi-year low and that the EU rapeseed crop deficit is likely to grow, said Peter Collier, analyst at that UK based organization.
There will be an increased need for importing rapeseed into the EU in 2019/20, he said.
Up to now, at a European level, the gradual trend for a declining rapeseed crop area in the major growers has somewhat been mitigated, as countries further east have been gradually increasing their planted area, he said. Yet 2019/20 is forecast to see a rapid acceleration to this shifting production landscape with the substantial declines in area are forecast for France, Germany and the UK, he said.
EU exposed to Black Sea growing conditions
European rapeseed markets may face an unusual market situation this year then - as the focus for rapeseed production is to move further east, markets will have a greater exposure to the conditions in countries such as Romania and Ukraine, noted the analyst.
Collier told FeedNavigator:
“With a likely greater need for importing oilseed rape in 2019/20, and Ukraine the predominant import origin, EU rapeseed markets will be more exposed to import origin prices.
“While the EU will be in deficit once more next year, with a tighter supply, this would classically lead to a price rise on a supply and demand curve.
“However, with larger volumes of imports, EU markets will price to an even greater extent on Ukraine prices, and Ukraine is forecast a much larger crop, with the area forecast up ~29%. Therefore, a potentially bearish Black Sea outlook, while EU supply and demand factors would appear bullish.”
The May-19 Paris rapeseed futures contract has fallen to the lowest level in 2018/19, closing at £316.70/t (US$413.2/t) on February 19 2019. A combination of pressure from the wider vegetable oil complex, and reducing biofuel demand has pressured the May-19 Paris rapeseed contract, added the analyst.