Record-high temperatures have been reported across France and Germany in the waning days of July, making this the second set of new record-high temperatures experienced by the region this summer. While these warm temperatures have certainly led to uncomfortable living conditions for locals and tourists alike, the impact can also be seen on the European Union’s (EU) developing rapeseed crop. The following map shows the extent of the heat that blanked much of the western EU with +35°C temperatures as of July 25.
According to the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) Post, 2019 rapeseed plantings were already seen 18 percent lower from 2018 and were driven primarily by dry seeding conditions in top producers France and Germany. This report was issued in late March and noted that a return to average yields would be necessary to keep output from falling further from the 20.061 million tonnes collected in 2018/19. In its July World Agricultural Supply and Demand Estimates (WASDE), USDA pegged its estimate of the crop at 18.700 million tonnes and according to local crop watchers, that figure is due for a downward revision in the agency’s upcoming August report. The following map was issued by the FAS and shows many of the same regions – particularly in northern France – that experienced the highest temperatures are key rapeseed growing areas.
According to reports, the European Commission cut its forecast for the EU rapeseed crop by 700,000 tonnes from June to 18.0 million tonnes. It would stand that USDA might make a similar cut should losses not be seen to exceed the commission’s current expectations. The following chart shows official USDA estimates of EU rapeseed output going back to 1990/91 and shows that if current output were to fall below 18.0 million tonnes in the upcoming harvest, it would be the first time falling below this level since 16.112 million tonnes was collected in 2006/07.
The size of the reduction of EU rapeseed output has the potential to drive larger imports of oilseed supplies from other producers or provide an opportunity for greater imports of other oilseeds. Persistent drought in Australia is expected to again limit exportable supplies in the year ahead after multiple short rapeseed crops, while Canadian shipments to the biodiesel sector need to be accompanied by certificates of sustainability. According to the merchandising manager for a major canola exporter interviewed by the website The Western Producer, Canadian producers have been gaining certification, which has helped to grow its supplier database by about 20 percent as growers look for an alternative market to China, who has essentially shunned imports of canola since spring due to political reasons. There also may be an opportunity for U.S. soybeans to gain additional demand into the EU beyond incremental growth that has already occurred in recent months. The following chart shows that cumulative shipments of U.S. soybeans in the 2018/19 marketing year are already running well above recent history in excess of 7 million tonnes.
According to USDA’s official estimates, the EU is projected to import 15.100 million tonnes of soybeans in 2019/20. If realized, this would be down from 15.800 million tonnes in the 2018/19 marketing year and well shy of 18.783 million tonnes imported at the recent peak in 2001/2002. The current combination of lower rapeseed output, excessive U.S. soybean supplies, and ongoing trade discussions between the U.S. and EU could provide a greater outlet for U.S. soybeans in the upcoming marketing year.
