EU rapeseed futures hit record amid China-Australia wash out talk

Euronext rapeseed futures traded in Paris hit a record high on Monday amid a fresh surge in the global vegetable oil complex on the back of stronger mineral crude values, strong biodiesel demand and amid reports of fresh fallout from China's lingering trade dispute with Australia.  

Earlier in the day, Chinese rapeseed oil futures had hit trade limits as reports of wash outs affecting Australia-sourced cargoes raised fears of a supply gap.

The May EU rapeseed future on the Euronext exchange, which is also sometimes known as Matif, reached €528.75/mt in early trading, taking it through the all-time high of €526.25/mt set in 2012 before settling back in later Monday morning trade to stand at €525.50/mt by 1600 London time.

“Matif hit a record because of various reasons - a weaker euro, better biodiesel margins, sunoil’s premium over rapeseed oil is jumping and the Chinese Zhengzhou rapeseed oil future surged earlier in the day,” a Dutch broker told Agricensus.

Chinese rapeseed oil futures on the Zhengzhou Commodity Exchange hit a trade stop as expectations of supply shortage drove prices higher after reports that importers had washed out several Australian rapeseed cargoes.

The most liquid contract closed over 4.5% higher at CNY11,035/mt ($1,687/mt).

Two companies based in southern China were said to have cancelled at least two 30,000-40,000 mt cargoes of Australian rapeseed recently amid lingering trade tensions between the two countries.

“Two companies washed out... The entire vegoil board has been strong and rapeseed supply is expected to be tight,” one China-based source said.

That dynamic caused some Chinese companies to shift focus to the European rapeseed oil market on Monday, which added fuel to the fire for both the oilseed futures contract as well as the oil's cash market.

“China is looking for new crop,” another broker told Agricensus, adding that China has been a regular buyer of 20,000-40,000 mt per month of European rapeseed oil.

The May-June-July strip in the rapeseed oil cash market traded first at €1,030/mt FOB Dutch Mill followed by a second trade at €1,035/mt, with the market said to be bid on after the trade's conclusion.

Rapeseed oil prices in the Dutch hub were assessed €30/mt higher from the end of last week to stand now at multi-year highs.

“Chinese demand for European rapeseed oil is keeping hold of the market, and when biodiesel demand gets a further demand boost Q3 and Q4, we’ll see the market heat up further,” the Dutch broker added.

In China, all major vegetable oil futures jumped with Dalian’s palm oil closing 3.8% higher at CNY7,776/mt ($1,189/mt), while soyoil futures closed 4.7% higher at CNY9,388/mt ($1,435/mt).

That followed palm oil futures on the Bursa Malaysia hitting a 10-year high of MYR3,954/mt ($963.22/mt) early on Monday, while CBOT soyoil futures where near a seven-year high of 52.53 ct/lb.

Global tight stocks of vegetable oils and growing worries on the size of the Brazilian and Argentine bean crops have boosted the vegoil complex over the past couple of weeks, with surging crude oil benchmarks intensifying the rally on Monday.