Global Oilseed Markets in Turmoil: Tariffs, Tight Supplies, and Shifting Demand Drive Volatility
Market Report: Rapeseed, Canola, and Soybeans – November 2024
1. Rapeseed Market in Europe
The rapeseed market on Euronext remains under pressure. The February front-month contract dropped significantly by
13.75 EUR, closing at
493 EUR/t, marking its first dip below 500 EUR since mid-October.
Factors Driving the Price Decline:
- Weak Canola Market: Declining prices in Canada directly influenced the European market. Canola prices on ICE fell by 15.70 CAD to 564.60 CAD/t (382 EUR/t).
- Trade Policies: The announcement by incoming U.S. President Trump of a 25% tariff on Canadian imports has significantly worsened the marketing outlook for Canadian Canola.
- Small EU Harvest: Despite falling prices, demand in the EU remains high due to a below-average harvest in 2024.
2. Canola in Canada
Canada faces uncertainties surrounding its final harvest figures. Traders expect the current estimate of
19 million tons to be revised downward:
- Expected Adjustment: Likely reduced to 17–18.5 million tons, reflecting lower-than-expected yields.
- Market Impact: Prices could rise in the short term if Statistics Canada confirms production at the lower end of estimates.
Alternative Markets:
- The EU emerges as a potential buyer due to high demand from its limited harvest.
3. Soybean Market
In contrast to rapeseed, soybeans saw gains on the Chicago Board of Trade (CBoT):
- Price Movement: The January contract rose by 5.25 ct to 988.75 ct/bu (344 EUR/t).
- Key Drivers:
- Export Demand: The USDA reported an export sale of 132,000 tons of soybeans to China for the 2024/25 season.
- Trade Policy: Trump’s proposed tariffs could increase domestic demand for U.S. soybeans, particularly for biodiesel production.
- Weaker U.S. Dollar: A weaker dollar has boosted the global competitiveness of U.S. soybeans.
Limiting Factors:
- Favorable Weather in South America: Good conditions in Brazil and Argentina are likely to maintain global supply stability.
- Upcoming Export Data: The USDA’s weekly export sales report, delayed due to Thanksgiving, is expected to show 1.5–2.5 million tons of soybean exports for 2024/25.
4. Palm Oil Market
Malaysian palm oil futures posted gains for the third consecutive trading day:
- Price Growth: Supported by tight supply and expectations of increased demand ahead of Ramadan and the Chinese New Year.
- Production Challenges: Malaysian palm oil production remains subdued, further bolstering the market.
5. Outlook
Rapeseed and Canola:
- Short Term: Uncertainty over Canadian harvest results and Trump’s trade policies will continue to weigh on prices.
- Medium Term: The EU could stabilize prices through increased imports from Canada.
Soybeans:
- Short Term: Strong demand, particularly from China, will support the market.
- Medium Term: Weather conditions in South America will play a critical role in determining future supply and prices.
Palm Oil:
- Demand Growth: Anticipated seasonal demand spikes for Ramadan and the Chinese New Year are likely to sustain prices in the coming weeks.
Conclusion
While the rapeseed market remains under pressure due to global uncertainties and weak canola prices, the soybean market shows strength from robust export demand and positive policy signals in the U.S. Palm oil benefits from seasonal demand. In contrast, Canadian harvest uncertainties continue to impact market dynamics. Developments in trade policies and export trends will be critical to shaping the market in the weeks ahead.
