Uneven Rapeseed Market as Uncertainty Looms Over Trade Policies and South American Harvest

The rapeseed market at Euronext (MATIF) ended Tuesday’s trading session with mixed results. Front-month contracts weakened, while new crop contracts showed slight gains. The most actively traded May contract declined by €5.25 to €511.50/t, reaching its lowest level since January 6. Meanwhile, Chicago Board of Trade (CBOT) soybeans, soybean meal, and soybean oil saw slight gains. The March soybean contract closed unchanged at 1,045 cts/bu, with new crop contracts showing stronger gains than front-month futures.

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Market Overview and Key Developments

1. Uncertainty in the European Rapeseed Market

• Canola prices surged on the ICE Futures exchange in Canada, gaining 9 CAD to 639.70 CAD/t—a two-week high.
• The unexpected rally is believed to be driven by technical short-covering, rather than fundamental strength from the CBOT soybean complex or Malaysian palm oil.
• Malaysian palm oil futures rose by 1.5% on Tuesday.
• The Chinese market remains closed for the Lunar New Year until February 4, limiting demand signals from Asia.

2. Political Uncertainty and Potential Trade Tariffs

• The U.S. and Canadian markets remain on edge as traders await clarity on potential 25% tariffs on imports from Mexico and Canada.
• White House Press Secretary Karoline Leavitt confirmed on Tuesday that President Trump is still considering imposing tariffs on Canada and Mexico by February 1.
• Additionally, the Trump administration is "seriously considering" new tariffs on Chinese imports, adding further uncertainty to global oilseed trade.

3. Delayed Soybean Harvest in Brazil

• The Brazilian government agency Conab reported that the 2024/25 soybean harvest is just 3.3% complete, significantly behind last year’s 8.6% at the same time.
• Heavy rains are delaying the harvest, and continued wet conditions could further disrupt progress.
• In Argentina, upcoming rainfall is expected to ease drought stress on soybean crops, potentially improving yield prospects.
• Analyst Michael Cordonnier has maintained his estimate for Brazil’s soybean crop at 170 million tons, while reducing Argentina’s forecast by 2 million tons to 49 million tons.

4. EU Rapeseed and Soybean Imports Continue to Rise

• EU soybean imports for the 2024/25 marketing year (July-January) reached 8.03 million tons, up 13% from last year’s 7.11 million tons.
• EU rapeseed imports also increased, reaching 3.57 million tons, compared to 3.30 million tons in the previous year.

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Latest Euronext Rapeseed Prices (January 29, 2025)

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Outlook

• Short-term sentiment in rapeseed remains fragile, with pressure from delayed Brazilian soybean harvests, potential U.S. tariffs, and volatile ICE Canola prices.
• Fund managers remain cautious, closely watching developments in South America and U.S. trade policy.
• The next major market mover will be Brazil’s harvest progress and any new trade policy announcements from Washington.

With CBOT soybeans lacking strong bullish momentum, rapeseed prices may continue to struggle in the near term.

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