Sharp fall for oilseeds as investment funds look to sell

Global oilseeds markets have plummeted in the last fortnight driven by a combination of geopolitics and repositioning by investment funds.

Paris rapeseed futures for the February 2025 contract opened at €516/t (£428/t) on 3 December down by €32/t (£27/t) since peaking in mid-November.

Meanwhile, UK-delivered OSR has been trading at about £436/t in the last week.

See also: OSR plantings at 40-year low as sector looks for solutions

US president-elect Donald Trump has indicated that tariffs could be placed on Canadian canola imports, which has put some pressure on global markets.

Peter Collier, area manager at United Oilseeds told Farmers Weekly that the US has been a large importer of Canadian canola and the threat of potential tariffs has weighed on the market and dragged down Paris rapeseed futures as well.

Mr Collier said that investment funds had been heavily invested in Paris rapeseed and had reached record levels, however in the last week these funds had started to sell off.

He added that support from investment funds had been responsible for the large rally in oilseeds markets since mid-August in the rapeseed market, but warned that the sector now needed to be wary of any potential sell off.

“Last week we had a sharp correction in rapeseed values, quite a lot of that could have been driven by investment funds trying to get out of those positions before Christmas.”

Supplies

The 2025 UK rapeseed area is forecast to be the lowest in more than four decades at 215,000ha, producing a crop of roughly 664,000t.

However, plantings have been holding up well and 73% of GB winter oilseed rape plantings were in good to excellent condition, according to AHDB’s first crop development report.

Helen Plant, senior analyst at AHDB said the levy boards report showed winter oilseed rape remains in a much stronger condition than winter wheat, barley, and oats.

Ms Plant said roughly three-quarters of the OSR crop was planted in August with better weather, while the more difficult autumn conditions had a larger impact on cereal plantings.

Meanwhile, the European Commission has projected the EU’s combined oilseeds production to be lower in 2024-25, down by 8% on the year at 29.7m tonnes, due to both lower rapeseed and sunflower production.

However, Strategie Grains has forecast the 2025 EU rapeseed crop up by 12% at 18.7m tonnes.

Longer-term trends

Traders have indicated that domestic oilseeds markets may remain volatile into the new year as investment funds look to sell ahead of the February contract.

Further ahead, a smaller Australian crop could help to support the market for 2025-26 crop year, especially given relatively tight supplies in Europe.

Modelling by United Oilseeds has calculated that a future carbon tax on fertiliser could add an additional £15/t to the cost of growing rapeseed based on an anticipated £50/t increase in the cost of nitrogen.