Rapeseed is part of the global oilseed complex. While rapeseed moves independently from other oilseeds at times, substitution in various markets continually brings it into line with soybeans, a key player in oilseeds.
Figure 1 shows global oilseed production data from the United States Department of Agriculture (USDA) over the past 15 years. A new record production level is expected in 2023-24 with production of 659 million tonnes. Growth in oilseed production has been exceptionally strong in recent years.
Year on year, 3% more oilseeds were produced in the period 2023-2024, while the growth in the last 10 years corresponds to 43%.
Of the 659 million tons of oilseeds produced last year, 398 million tons were soybeans, accounting for 60% of the total supply. The United States produces 28.5% of the world's soybeans, but South America is the largest exporter.
The USDA has released forecasts for U.S. soybean production for 2024-25, anticipating a bumper crop. Figure 2 shows that the USDA expects soybean production to exceed 120 million tons for the fourth time, reaching 122.6 million tons, beating the previous record by 1.7%.
Increasing supply generally has a negative impact on prices and we have seen what has happened to soybean and canola values over the last 12 months as last year's crops have now led to expected production increases.
Futures markets take supply and demand into account and output a price. Figure 3 shows the forward curves for US soybeans and French canola. The forward curves are relatively flat and are close to three-year lows.
The futures markets match the level of U.S. soybean production in terms of price levels relative to supply levels. A premium is built into futures prices to account for the variety of risk factors for a crop that has not yet been sown. If the production forecasts come true, prices could therefore be lower.
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