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Agriculture Europe

EU rapeseed buyers set to dig into stocks

European rapeseed consumers will be forced to dig deep into stocks in the new marketing year to make up for an 11% drop in domestic supply as this year’s drought cuts the projected harvest back to more typical levels than the bumper crop of 2014/2015, the European Commission said in its summer crop update. Tightness in the global rapeseed market meanwhile will restrict European import opportunities as drought bites in Canada and Australia and plantings fall in Ukraine. The commission is forecasting a 21.7mn t EU rapeseed harvest for 2015, down from 24.3mn t in 2014/2015, although up relative to 2011-2014. End stocks are expected to finish the 2015/2016 marketing year 23% lower than in 2014/2015 at 3.3mn t.

Imports in the first five months of this year already collapsed to half the year-ago level, with just 805,000t shipped into Europe compared to 1.6mn t a year-ago.Australian shipments slumped but still supplied the bulk of the EU’s rapeseed imports in January-May this year, with 676,000t shipped, down from 1.26mn t in the year-ago period. Canadian exports to the EU dropped to virtually nothing from a tiny 22,500/t in the year-ago five month period. Ukrainian exports in the first five months dropped 44% compared to the year-ago period to 110,000t. 2014 saw 6.9mn t of rapeseed shipped into the EU in total, with Australia and Ukraine together supplying 60% of the bloc’s externally sourced rapeseed.

Rapeseed market tightness is likely to drive feed importers to substitute cheaper soybean meal as the soy meal/rape meal spread tightens, the commission said. Forward spreads between rapeseed oil and US bean oil futures are currently flat from August to the end of the second quarter of next year at $77-$79/t. RME/FAME zero biodiesel spreads start to mirror feedstock spreads from the fourth quarter of this year, reflecting waning winter FAME 0 demand.

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