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Where next for rapeseed prices?

As we’ve moved into the new season, we have seen both EU and domestic rapeseed prices firm. However, there are beginning to be signs that short-term support for oilseed rape prices may be waning, writes James Webster, senior analyst, cereals and oilseeds, at the Agriculture & Horticulture Development Board (AHDB).

Last updated: 25 Nov 2019 5 min read

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UK rapeseed production in 2019/20 is provisionally estimated by Defra at 1.75 million tonnes (Mt), the lowest level since 2004/05. Last season’s oilseed rape (OSR) crop was heavily impacted by the dry establishment window and further ravaged by cabbage stem flea beetle.

Establishment and production issues for OSR were not isolated to the UK, with production in the EU as a whole the lowest since 2006/07.

Until recently, the reduced production trends had served to firm the price of rapeseed. UK delivered rapeseed prices (spot, Erith) climbed to their highest level since April 2017 at £345.50/t. Prices have subsequently fallen back, driven by a few distinct factors.


Rapeseed has, in the past, been referred to as a ‘Brexit-proof’ crop, owing to the fact that the seed itself is not subject to tariffs. In truth, no part of agriculture is Brexit proof, owing to the impact of currency.

As we’ve moved through October, sterling has risen considerably, as has the euro. Since the beginning of October, sterling has risen by 3.3% against the euro on the back of Brexit progress. Meanwhile, Brexit progress has also seen the value of the euro rise 2.0% against the dollar.

The movements in sterling and in the euro have pushed rapeseed markets considerably lower during October. Since 8 October, Paris rapeseed futures (November 2019) have fallen €13.25/t (or £26.39/t in sterling terms).

Further fluctuations in sterling and the euro will be key to defining rapeseed price movement going forward.

Supply and demand

The move lower in EU rapeseed prices isn’t entirely currency led, and, while the supply picture is largely known, demand dynamics in the EU will also be important determinants of prices going forward.

With tightness in the EU, European crushers have focused demand on imported oilseeds and oils. For the most part, this has taken the form of a heavily frontloaded import schedule of Ukrainian rapeseed. This has been especially notable in Germany and France, but, with such heavy levels of imports, short-term demand, particularly in Germany, has started to ease.

Furthermore, the demand for biodiesel has also reportedly stalled, further capping demand for rapeseed.

Ukrainian OSR won’t last forever

Ukrainian rapeseed production, while at record levels, is finite. The US Department of Agriculture (USDA) estimates Ukrainian exports of oilseed rape at 2.7Mt, of which 2.4Mt is already booked. This leaves just 300Kt of rapeseed for movement from October to July.

With this in mind, the EU market will be in need of rapeseed in the second half of the season, once the Ukrainian supply dries up.

Where will the EU source its rapeseed from?

With Ukrainian supply likely non-existent from January to July 2020, the EU will be reliant on supplies from other origins, namely Australia and Canada, or on other oilseeds and oils.

Australia is typically an important source of canola (oilseed rape) in the second half of the marketing year. However, this season Australia is experiencing its own supply headache. Canola production in Australia is presently forecast at 2.2Mt, by the USDA, with 1.7Mt of this destined for export.

However, this may not encapsulate the full extent of the drought on the Australian crop. In its latest forecast, Rabobank has cut its estimate of Australian production to 1.7Mt.

It is also worth noting that there are competing draws on Australian canola: firm import demand from Asia could cause further tightness in the EU rapeseed market.

In Canada, the canola harvest is currently ongoing, and has been delayed by poor weather. That said, canola stocks for Canada remain large and Winnipeg canola futures are currently at a significant discount to Paris rapeseed futures, which will incentivise movement of Canadian canola to the EU.

One thing that will prevent a large influx of Canadian canola is its GM characteristics. While this isn’t an issue in industrial uses, it does preclude usage of the oilseed in feed and food.

Rapeseed dynamics point to support

Beyond the current supply of Ukrainian rapeseed, notwithstanding currency fluctuations, the oilseed rape market still looks well supported.

The degree to which the market retains support, and the degree to which prices have the potential to recover depend on the ability of end users to switch between different oilseeds and oils. Interchangeability between oils has already been seen in Spain, Italy and Portugal, where rapeseed oil is mainly used in human consumption markets.

Both Italy and Portugal have increased their imports of cheaper sunflower oil, while Spain has increased its imports of palm oil. If this trend continues for other countries throughout the course of the season, then some of the support for rapeseed prices will be limited.

The degree to which industrial demand supports rapeseed prices will depend on the time of year and crushers’/blenders’ ability to change feedstock.

In the summer months, when waxing is less of an issue, we may see an increased switch to palm oil in biodiesel blends. Again, this cheaper oil could reduce some pressure on the rapeseed market.

Rotational considerations for 2020/21

There are few alternatives to rapeseed as a break crop in rotations and, as such, the area planted to the crop this year is unlikely to be dramatically different to this season. Furthermore, the price of oilseed rape was strong during planting.

However, a strong price is no guarantee of strong returns. The risks associated with growing OSR have increased considerably of late: the rise of cabbage stem flea beetle (CSFB) and the tools to deal with it have resulted in significant damage to domestic crops, eroding profit.

As a result, expectations remain for another small domestic crop in 2020/21.

Click here for more information about AHDB.

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