Rapeseed Oil Prices Explained
Efficient crushing made rapeseed oil prices turn sour, marking its reduced 0.51% value in 2024. Will the commodity’s price continue to go down? First, let’s check the top factors that affect its fluctuating prices.
Why are rapeseed oil prices fluctuating?
1. Supply, Demand, and Other Oilseeds
The increasing demand for biodiesel is the prime price mover of oilseeds. Additionally, rapeseed oil price is closely related to the value of other vegetable oils such as soybean and sunflower oils. Thus, when any of these oilseeds supply, demand, and cost fluctuate, it ripples to each price respectively.
2. Weather Conditions
Weather conditions have a significant impact on rapeseed oil prices. A poor harvest due to drought, flooding, or other weather-related events leads to a decrease in supply and an increase in prices. Conversely, a good harvest results in an increase in supply and a decrease in prices.
3. Biodiesel Demand
As governments around the world look to reduce their reliance on fossil fuels, coupled with intensified sustainability programs, the demand for biodiesel continuously goes up. This means more utilization of natural resources that are capable of producing green fuel and rapeseed is not an exception.
Thus, this new and longer approach to fuel production will drive up rapeseed oil prices.
4. Government Policies
Government policies also affect rapeseed oil prices. For instance, government subsidies for rapeseed production can increase supply and drive down prices. Conversely, government tariffs on imported rapeseed reduce supply and inflate its prices.
Additionally, there are other factors affecting rapeseed oil prices such as the exchange rate between the Euro and the U.S. dollar, the cost of production, and the level of inventory.
Thus, these elements all contribute to price volatility.
Which variables impact the price of rapeseed oil?
- Supply, Demand, and Oilseeds
- Weather Conditions
- Biodiesel Demand
- Government Policies
- Currency Exchange Rates
- Production Costs
Where does rapeseed oil come from?
Rapeseed is a flowering plant in the mustard family that is native to Europe and Asia. Cultivated for over 4,000 years, its seeds have been used for food, oil, and medicine.
Indians cultivated rapeseed for over 4,000 years and in the second millennium BC ( before Christ ), it spread to China and Japan. In the first millennium AD ( Anno Domini, the year of the Lord ), it expanded its reach to Europe through traders and travelers.
Originally used for lighting and cooking, rapeseed oil is not safe for human consumption as it contains a high level of erucic acid, a fatty acid that can be harmful to the heart.
In the 1970s, Canadian scientists developed a new variety of rapeseed with a low level of erucic acid. This new variety, called canola, suits for human consumption and quickly becomes popular around the world.
Rapeseed is a cool-season crop which grows in temperate climates around the world.
The rapeseed season typically begins in the spring and ends in the fall. The exact timing of the season varies depending on the location and climate.
In North America, the planting season starts in April or May and the harvest season starts in August or September. In Europe, rapeseed is typically planted in March or April and harvested in July or August.
Nowadays, Canada is the world’s leading supplier of rapeseed and rapeseed oil, accounting for over 40% of global production. China is the second largest producer, followed closely by India, the European Union, and Australia.
What is the future price of rapeseed oil?
While rapeseed prices rest on levels presently, oilseeds experts are hopeful of its bounceback in 2024 as the European region sees area reduction of rapeseed. Additionally, Canada hasn’t started its planting season yet. Thus, low production will translate to elevated rapeseed prices.
Overall, the volatility of oil prices coupled with biodiesel demand and extreme changing weather systems which highly affect its production capacity will keep rapeseed oil prices in a bullish market as experts predicted a €5.36 price increase in 2030.