Canada Markets

European Rapeseed Late to Rally

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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February rapeseed broke out from a range traded this month in the final minutes of Dec. 16 trade on the highest volume seen in 20 sessions. Price remains below the Nov. 23 high of EUR417. The lower study shows the Feb/May futures spread has weakened 1 euro over the first three days of this week. (DTN ProphetX chart)

In the final minutes of the Dec. 16 session, the February rapeseed contract on the Paris Liffe market broke out of the range traded this month, reaching its highest trade in 12 sessions while its first close above its 20-day moving average in as many days. The February contract gained EUR3.75 to EUR411.50 per metric ton, while remains below the EUR417 high reached on both Nov. 20 and Nov. 23.

Rapeseed is late to join the rally in global oilseeds and vegetable oils, with the benchmark March crude palm oil contract, the January soybean oil contract and the January canola contracts all reaching contract highs this session. Today's move was despite euro strength against the USD, with the exchange rate reaching $1.22 EUR/USD, its strongest trade against the USD since April 2018.

So far this week, the Feb/May rapeseed futures spread has seen the inverse weaken by 1 euro to EUR6.75/mt, a less bullish view of fundamentals overall.

In addition to the bearish currency influence, weekly European Union data shows the region temporarily sheltered from the global oilseed markets due to the availability of Ukraine imports.

As of Dec. 9, weekly EU data shows Australian canola priced at $494/mt USD ($45, 10%) FOB, Canadian canola prices at $503/mt USD FOB ($138, 37.8%), while Ukraine rapeseed is shown at $445/mt USD ($10, 2.3%), with the year-over-year change in dollars and by percent change shown in brackets. It is clear that the minimal year-over-year change in Ukraine's export prices of $10/mt or 2.3% along with the country's grip on meeting Europe's import demand is a factor that has also kept a lid on European prices.

Weekly import data shows the EU's cumulative 2020-21 imports at 3.175 million metric tons, where Ukraine's share is 61.3% or 1.946 mmt of the total and Canada's share is 35.2% or 1.119 mmt of the total imports.

USDA forecasts show that Ukraine's 2020 production is pegged at 2.5 mmt, down from 3.465 mmt in 2019. Exports are pegged at 2.1 mmt, down from 2.996 mmt from 2019-20. Weekly EU data shows that current 2020-21 imports from Ukraine may be nearing an end for the crop year and this bears watching.

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