Oilseeds market outlook

February 2024

The latest Oilseeds Agri-Outlook takes stock of the current situation and looks forward to what we might expect in the coming months, for supply availability, trade and demand. The volumes below are estimates at the time of writing.

Last year domestic oilseed rape (OSR) production had the potential to be the highest since 2019, as the sown area grew by 7.4% year-on-year. High oilseed prices throughout 2022 outweighed anxieties over crop failure, which led to the rise in area. Unfortunately, pest pressure and less than ideal weather ensued, and UK yields averaged 3.1 t/ha for 2023, down 17% on the year (Defra).

Global factors mean OSR prices have fallen sharply. As of 2 February 2024, domestic OSR spot delivered prices were over £200/t lower than the peak in 2022. The lower prices combined with the 2023 harvest not delivering, means a drop in the OSR area for 2024 harvest is anticipated. The AHDB Early Bird Survey (EBS) pegged the UK OSR area at 317 Kha for harvest 2024, down 19% year-on-year, the lowest area since 2021. AHDB will release an update on the potential cropped areas for harvest 2024 on 8 March, subject to spring weather allowing sufficient planting progress.

This sown area suggests UK OSR production in 2024 could range from 894 Kt to 1,200 Kt, based on the low, average and high yields of the past five years.

However, historically the data shows in some years there are area losses between the EBS forecasts in November and the final harvested area. For example, for harvest 2023 the final Defra area was 6% lower than the area in November (EBS). So, the 2024 harvested area could be lower than what was initially forecast in November. If a 6% reduction was indicatively applied to this year’s initial estimated area, OSR production could range from 814 Kt to 1,100 Kt.

From July to November 2023, the UK imported 361.5 Kt of rapeseed, down 11% from the same period in 2022. Over 88% of that has been from EU origins, due to the seasonality of harvests and supplies coming online.

It’s expected that the domestic requirement for rapeseed imports will continue to be strong in the second half of this marketing year (2023/24) due to strong crushing demand. However, rapeseed imports are going to be reflective of the production at harvest. It’s expected that total imports will be around last year’s level, when imports totalled 725 Kt.

As for the origin of those imports, it’s coming to the time of year when vessels are starting to leave Australia and head towards Europe, to meet the second half of the season’s demand. Australia’s production, however, is lower than usual due to the El Niño weather event, and exports to the EU and UK will reflect that lower production.

It’s likely that UK imports in the second half of the marketing year will be made up of a larger proportion of Australian or some Uruguayan rapeseed – though OSR production from Uruguay is down year-on-year. Further to that, supplies may still trickle in from Europe and possibly Ukraine as they still have over 345 Kt of OSR for export in 2023/24 (UkrAgroConsult).

Demand for rapeseed is expected to remain strong for the rest of this marketing year. Industrial margins on both the continent and domestically remain positive, despite coming down slightly from the first half of this marketing year.

On the continent it is anticipated that rapeseed crushing will slow down in the second half of the year as margins reduce, and due to increased competition from other oilseeds.

The UK’s demand for OSR will remain at c.2.0 Mt (USDA), and any further reductions to gas prices in 2024 could further help maintain positive margins.

Domestic rapeseed prices were significantly pressured in the past year: in the 12 months to 19 January 2024 rapeseed prices have come down by over 20%. This is partly due to cheaper Ukrainian oilseed rape coming into the European market. Further to that, the overall bearish sentiment of the soyabean market has weighed prices as record South American soyabean crops are starting to come to the market.

Prices in the short term still have downward potential: not only from this South American soyabean crop, but also because Europe’s rapeseed and rape oil balances are in surplus. It’s critical to note that new-crop rapeseed price pressure will follow this bearish sentiment, but losses may be limited as OSR’s trading relationship to soyabeans has changed for new crop. This indicates that rapeseed production in the EU-27 may not be as large as initially anticipated.

Our experts focus on crop prospects, global trends, possible destinations for UK cereals and oilseeds, and impact on prices.

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