May 18, 2011

 

EU rapeseed output may plunge on dry weather and frost

 

 

EU rapeseed production may decline by alarming proportions next year to the lowest in three years as frost and dry weather curb yields, researchers said in a report.

 

Output of the oilseed may fall to 19.5 million tonnes in the year that starts on July 1, down 5.2% from a year earlier, the researcher said. Stockpiles will drop 16% to 1.08 million tonnes, according to the report. Dry weather in France and Germany, the biggest European producers of rapeseed, will hurt output, they said.

 

"The deterioration of rapeseed production prospects is about to reach alarming proportions," researchers said. "We have received new information about larger-than-expected damage from frost and dryness as well as about poor crop conditions."

 

Rapeseed futures for July delivery gained US$1.80, or 0.3%, to US$572.35 a tonne at the close yesterday on ICE Futures Canada in Winnipeg. The price, already up 47% in the past year, will outpace soy in the medium term, researchers said.

 

Processing of rapeseed also will decline 2.7% to a three-year low as users will face limited supplies and "have to struggle to cover their requirements," researchers said. Imports from North America or Eastern Europe may be required to make up for the shortfall.

 

Wet weather delayed seeding of EU winter rapeseed in August and September, mostly in Germany and Poland. In the past six weeks, dry weather contributed to "irreversible damage to the rapeseed crops in several parts of the EU," according to the report.

 

Germany's crop is expected to decline 17% to 4.75 million tonnes, according to the report. Rainfall in March was about a third of normal, causing plants to develop poorly.

 

"Severe soil moisture deficits are reported and more than 200 millimeters (7.9 inches) of rainfall is required in the next six to eight weeks, which is quite unlikely to occur," they said. "On an estimated 8% of the area, farmers used irrigation facilities to limit losses."

 

Wet weather in Canada also is delaying planting of crops including rapeseed, which may further limit supply.

 

Exports of soyoil to China may resume as the Asian country may buy 600,000 tonnes from Argentina, researchers said, citing the Chinese Commerce Ministry. Argentina's Foreign Minister Hector Timerman said on May 13 that the South American country agreed to sell 500,000 tonnes of soy oil to China. Soyoil futures have gained 50% in the past year.

 

China had restricted shipments from Argentina, the largest exporter, in April last year because of trade disputes ranging from textiles to kitchen products.

 

"We assume that the trade conflict has thus been resolved and that the decision of the Argentine government to reduce or eliminate import taxes on Chinese consumer goods will now facilitate increased exports of soyoil to China," researchers said. "Lower-than-expected exports resulted in higher-than-expected soyoil stocks in Argentina, Brazil, and the US as of early May."