Europe's rapeseed market could feel the blow from Wednesday's European Union decision to reopen access to biodiesel imports from Argentina to the world's largest market. Prior to 2013, Argentina was the primary supplier of biodiesel to the EU, when the EU placed a 24.6% tariff on imports that affected volumes of approximately 1.5 million metric tons annually. Today's move follows four years of negotiations and a complaint to the World Trade Organization, which resulted in a favorable ruling.
This week's decision is expected to lead to a revised tariff between 4.5% and 10%, which will return to a level close to where it was pegged in 2013 and is being welcomed by the industry in Argentina. Long-term, this could open the door to challenges from Indonesia, another country that was included in the high tariffs imposed by the EU in 2013, while the ruling may also support a challenge against the recent countervailing duty of up to 64.17% only recently applied by the United States.
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This move comes at a time when the EU is forecasting their largest rapeseed crop in three years estimated at 21.856 million metric tons, an 11.2% increase from the previous crop year. While Canada's export potential will be lower in the current crop year given the higher production, Statistics Canada tables reports 769,360 metric tons exported to Western Europe in the 11 months to June 2017, up sharply from previous years.
Despite tight global fundamentals for canola/rapeseed, with the USDA forecasting 2017/18 ending stocks/use at a bullish 6.5% in its August Oilseeds: World Markets and Trade report, both canola and rapeseed are on the defensive while showing a similar move on Wednesday. November canola found support at $492/mt, the 67% retracement of the move from the contract's June low to July high, while the rapeseed chart is nearing a test of this same retracement level at EUR362.82. The Nov/Feb rapeseed spread weakened on Wednesday, a sign of bearish commercial selling while nearing a test of potential support on the spread chart.
Cliff Jamieson can be reached at email@example.com
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