Germany’s environment minister, Steffi Lemke, unveiled plans on Tuesday this week to ditch crop-based biofuels as a way of achieving reductions in greenhouse gases.
“Biofuels stand for land consumption and loss of biological diversity,” according to a speech by the politician as reported by Reuters. “To replace only around 4% of fossil fuel use in German road transport, a land space in Germany and abroad is needed which represents about 20% of the German agricultural area. That is not future-orientated.”
Paris rapeseed futures for May crashed through €550/t (US$594/t) and the previous level of market support to a 17-month low, falling below €540/t, before a slight recovery today, said the UK grain and oilseed market analysts.
Corn markets unwinding
“Yet rapeseed hasn’t been the only commodity under pressure. After an initially strong start to the week, corn markets have been unwinding, falling back down to just shy of $6.70/Bsh and right back where we were this time last week. Behind the pressure have been growing hopes for drought relief in Argentine, improving the prospects for corn and soybeans as forecasts turn wetter.”
The drag on corn markets also extended to wheat, with Chicago May-23 also giving up early gains to fall back down to $7.40/Bsh, reported the CRM Agri team.
UK feed wheat has also come under more pressure, with May-23 back below £230/t (US$284/t) as the pound strengthened against the dollar, they added.
However, in what has been a week of pressure for grains and oilseeds, crude oil has maintained and held onto the bullish moves of last week, trading between $85-$86/Bbl as prospects for long-term demand increase as China relaxes its approach to COVID-19, noted the analysts.
“The retreat in anti-Covid restrictions has come in time for China’s week-long new year festivities, which start this weekend, and are viewed in agricultural commodity markets as a key demand event.”