Rapeseed Prices Decline Amid Political Uncertainty and Weak Soybean Market
Rapeseed Prices Decline Amid Political Uncertainty and Weak Soybean Market
Rapeseed futures on Euronext (MATIF) continued their downward trend on Monday, January 29, 2025, reaching a three-week low. The most actively traded May contract fell by €7 to €516.75/t, mirroring weaker soybean prices in Chicago (CBOT). The March soybean contract dropped 10.75 cents to 1,045 cents/bu, while soybean meal and soybean oil also closed lower. Canadian canola futures on the ICE declined by 8 CAD to 630.70 CAD/t, reflecting broader weakness in the oilseed sector.Market Drivers and Key Factors
1. Impact of Argentine Export Tax Reduction
- Last week, Argentina reduced export taxes on soybeans (from 33% to 26%), soy meal, and soy oil (from 31% to 24.5%).
- This move has increased Argentina's competitiveness in the global export market, pressuring rival oilseeds, including rapeseed and canola.
2. Uncertainty Over U.S. Trade Policy
- Concerns persist over potential tariffs by U.S. President Trump against key trading partners like China, Mexico, and Canada.
- Canadian canola remains under pressure due to uncertainty over U.S.-Canada trade relations, further weighing on Euronext rapeseed futures.
3. Palm Oil Market Remains Stable
- Malaysian palm oil prices ended Monday nearly unchanged, despite broader weakness in the oilseed complex.
- A reduction in estimated January production in Malaysia helped prevent steeper losses.
South American Soybean Crop Updates
- Brazil’s 2024/25 soybean harvest is now estimated at 171 million tons, slightly above the USDA’s projection of 169 million tons, according to AgRural.
- AgRural lowered its previous forecast by 500,000 tons due to lower yields in Mato Grosso do Sul, Paraná, and Rio Grande do Sul.
- Mato Grosso, Brazil's largest soybean-producing state, is experiencing delayed harvest progress due to rain, with only 3.9% harvested by Thursday—the slowest pace since 2020/21.
- In comparison, 10.8% of the soybean crop had already been harvested at the same time last year.
USDA Weekly Export Inspections
- The USDA reported U.S. soybean export inspections at 729,362 tons for the week ending January 23, 20% lower than the same week last year and 8.5% below the previous week.
- Total soybean exports for the 2024/25 season now stand at 33.03 million tons, 19% higher than last year.
- However, traders expect a temporary slowdown in U.S. soybean exports to China due to upcoming Chinese New Year celebrations.
Outlook
- Weakness in the global soybean market continues to weigh on rapeseed and canola prices.
- Political uncertainty, particularly around U.S. trade policy, remains a major risk factor.
- Traders will closely watch weather conditions in Brazil and Argentina, as excessive rainfall or prolonged dryness could affect supply expectations.
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