Rapeseed prices are likely to remain uplifted even to the end of December 2024, driven by a combination of increasing demand, reduced supply from major exporting countries, and tightening market conditions. According to recent updates from Strategies Grains, the consultancy has raised its rapeseed inclusion forecasts for the European Union (EU), driven largely by a smaller-than-expected sunflower harvest. This adjustment in forecasts comes at a critical time as demand for vegetable oils, including Rapeseed Oil, has been steadily increasing, particularly in the food processing and biofuel sectors.

One of the key factors influencing the current price recovery is the significant reduction in rapeseed export volumes from Ukraine, a historically major supplier. As per the recent market data, as of November, Ukrainian rapeseed exports fell sharply to around 291,000 tonnes, down from approx. 475,000 tonnes in October. This decline was partly due to ongoing geopolitical tensions and logistical disruptions caused by the war in Ukraine, which have severely hindered export activities including those for Rapeseed Oil. As a result, Ukraine's export projections for the 2024/25 season have been revised downward to nearly 3.30 million tonnes, down from an earlier estimate of almost 3.70 million tonnes. These supply constraints from Ukraine have prompted buyers in the EU to seek alternative sources for rapeseed, which further continued to tighten the market dynamics, thereby supporting a persistent rise in the prices including for rapeseed and Rapeseed Oil.

In response to these challenges, the EU is increasingly turning to other countries for rapeseed imports. Canada, one of the world’s leading canola producers, is expected to pick up some of the slack left by Ukraine. However, despite Canada's significant production capacity, trade volumes from the country have remained limited. European processors have been struggling to secure adequate stocks, and this shortage of reliable supply is pushing up prices.  Adding to the pressure on rapeseed prices are the weather-related disruptions in key production regions. Adverse weather conditions in several areas have negatively affected both global oilseed crops and vegetable oil production including Rapeseed Oil as well. In Indonesia, heavy rains have disrupted palm oil production, which is indirectly boosting demand for alternative vegetable oils, including Rapeseed Oil.

Moreover, recent data has revealed a 9.7% reduction in crushing volumes in November, further signaling challenges in the rapeseed supply chain. This drop-in crushing activity is expected to have broad implications across the industry, impacting everything from Rapeseed Oil and meal prices to downstream sectors reliant on these products. Analysts are projecting that the reduction in crushing volumes will intensify the pressure on Rapeseed Oil and meal prices in the immediate future. With lower availability of processed rapeseed products, both Rapeseed Oil and meal prices are expected to rise, affecting a range of industries, including animal feed production, biodiesel, and food processing.

The combination of reduced supply, tightening crushing volumes, and rising demand has created significant pressure on rapeseed markets, likely leading to further price volatility. Both the vegetable oil and protein meal markets are expected to see higher costs, with Rapeseed Oil and meal facing the most intense price pressures due to supply challenges and strong global demand.

Looking ahead, market dynamics will depend on how quickly the rapeseed and oil supply chain adapts to these conditions. With continued strong demand in the food and biofuel sectors, particularly in the EU and India, Rapeseed Oil will remain crucial in global markets. The role of importers and traders in securing alternative supplies will be vital in balancing the demand supply equation. However, ongoing geopolitical risks, climate variability, and logistical disruptions may continue to keep prices elevated and create uncertainty throughout the oilseed supply chain.