The uptick in prices followed events in Ukraine and Australia, two of the three top exporting countries.
In Ukraine, the Nova Kakhovka dam explosion added to concerns over 2023/24 supplies from the war-torn country. While flood losses to this year’s crop caused by the dam’s breach do not look like they will be significant given that Kherson, the only province directly affected, was responsible for just 6% of domestic rapeseed production, pre-conflict, the breach reminded markets of the threat to rapeseed supplies posed by the war, beyond that posed by the uncertainty around the future status of the Black Sea grain initiative, stressed the CRM Agri analysts.
And there were fresh concerns this week for renewal of that UN-brokered grain export corridor as Russia said it saw “no prospects” for doing so. The latest extension is set to run out in mid-July.
Australian and Canadian market outlook
Meanwhile, Australia’s agriculture ministry revised downwards its forecast for domestic canola production in 2023/24, noting a “less favourable start to the [growing] season and drier outlook” as well as lower prices being a deterrent to sowing.
The downgrade came as Australia’s Bureau of Meteorology increased by 70% the chance of an El Nino the year, which tends to accelerate dryness in that country. Other official forecasters - Japan and the US - quote an even higher probability. The ag ministry cut its forecast for Australia’s 2023/24 canola exports by more than 1Mt, to less than 3.9Mt, representing a near-halving from the estimate for this season, which was upgraded to 7.2Mt, noted CRM Agri’s report.
Concerns over the other key canola exporter, Canada, have eased somewhat with May rains.
Oilseed prices across the board have been supported by the recovery in crude oil, which has a big influence on prices of vegetable oils, which are largely used in making biodiesel.
"Although the recovery in soybeans, a meal-heavy crop, has lagged that of high-oil-content oilseeds such as rapeseed, support has been underpinned by an unexpectedly modest start by the US 2023 crop," noted CRM Agri.