The Ukrainian rapeseed market is one of the few that is actually just beginning to feel the effects of the full-scale Russian invasion of Ukraine. Thus, taking into account the specifics of trade, the blockade of Ukrainian seaports became noticeable in the period when the active phase of concluding forward contracts for Ukrainian rapeseed used to begin. In fact, most of traders who already had experience of working in wartime, saw that the most interesting thing was ahead.
Overloaded logistics at the western border checkpoints due to a gradual increase in the flow of agricultural products, large sunflower stocks, growing supply of new-crop grains, moderate demand from European buyers, ISCC certification requirements are just some of the issues that Ukrainian exporters face.
At the same time, the forecast for the new season for Ukrainian rapeseed is quite optimistic. The country can retain its place in TOP-3 world exporters with a share of about 16% against 20% in the previous season.
In 2021/22 MY, Ukraine increased rapeseed export to 2.7 mln tonnes (+13% y/y) that was the second largest volume shipped after a record of 2019/20 MY. It accounted for one-fifth of the global trade.
Higher export was based on increase of rapeseed production by 20% to the second largest on record 3.1 mln tonnes.
Sharp decline of production and export of canola in Canada in 2021/22 MY favored stronger demand for Ukrainian rapeseed from traditional importers of Canadian oilseed (Pakistan, UAE).
The EU remained the key destination for Ukrainian rapeseed in 2021/22 MY. It accounted for 67% of the overall export from Ukraine. However, shipments to this destination decreased by 10% y/y.
In 2021/22 MY, Ukraine went down to the second place among the key suppliers of rapeseed to the EU, while Australia moved to the first place.
Pakistan accounted for 12% in the overall structure of Ukrainian rapeseed export. There were no shipment to Pakistan since October 2018. The share of the UK totaled 9%.
Rapeseed processing increased in 2021/22 MY to a record 421 thsd tonnes, up by almost one-third compared to 2020/21 MY. It was driven by high demand for rapeseed oil in the world amid poor harvest in Canada.
In Ukraine, the rapeseed harvesting campaign is progressing quite fast, and market participants note a sufficient supply of the oilseed.
According to preliminary data, the planted area under winter rapeseed of 2022 harvest has become a record, amounting to more than 1.4 mln ha (+45% y/y and +4% to the previous maximum of 2008), amid favorable price situation on the world rapeseed market in 2021/22 MY. In 2022, almost 34 thsd ha were planted with spring rapeseed (+7% y/y).
But, we expect the rapeseed production to decrease in 2022, primarily due to the reduction of the harvesting area to 1.1 mln ha.
Thus, taking into account that a significant part of winter rapeseed area (about one-fifth of the total area) is located in Zaporizhzhia, Kherson, Donetsk and Kharkiv oblasts, the territories of which are temporarily occupied completely or to a large extent, the rapeseed harvesting area can be only about 1-1.1 mln ha, which is almost at the level of last year. Dnipropetrovsk and Mykolaiv oblasts can also be added to the list (another 18% of the total planted area), which also suffer from constant shelling.
We also should take into account the losses in the oblasts that were liberated (Sumy, Chernihiv, Kyiv), or where shelling is still observed, which can also affect the final figure. Demining of shelled areas is ongoing where possible, but the harvesting risks are still too high.
Due to the untimely treatment of winter rapeseed in the oblasts with ongoing hostiles, the average yield of the oilseed will decrease to 2.4-2.5 t/ha in Ukraine, down 16% lower than the record of 2021.
According to the preliminary estimates by APK-Inform, the rapeseed crop may decrease to 2.7 mln tonnes (-13%) in Ukraine in 2022. However, this figure is only slightly lower that 5-year average.