The establishment of a UK-EU Sanitary and Phytosanitary Zone (SPS), announced at the UK-EU summit this week, could boost flows of UK-origin rapeseed oil (RSO) to the bloc. But pressure from increased availability on fob Dutch mill RSO prices could be somewhat offset by lower crush margins in Europe and international weather markets.
The UK's share in the EU's RSO import mix fell markedly after the country exited the bloc in 2020. The UK accounted for just 7pc of extra-EU imports across the last two marketing years (July-June) to date, customs data show, compared with an average of 41pc between 2016 and 2020 (see chart).
Agreed removals of some certifications and routine checks on EU-bound UK exports are likely to boost the volumes of UK RSO going to the EU, market participants said. But the pressure of increased supply from the UK on cargoes loading in the Netherlands could be cushioned by less attractive crushing margins and a wait-and-see approach to farmer selling.
Relatively low rapeseed crush margins — which have fallen by around €10/t on the year for August-September-October positions, market participants told Argus — has weighed on EU domestic crushing activity. This has largely offset price support from thin biofuel-sector demand in Europe and could limit the impact of greater supply potential from the UK.
And UK rapeseed supply is set to fall below previous years' levels, with planted areas forecast at a record-low 240,000 hectares (ha) in 2025-26 by the US Department of Agriculture (USDA)'s local attache. Farmers have been deterred from rapeseed production by unattractive margins and unfavourable growing conditions in the prior season, according to the USDA.
This, paired with forecast firming domestic demand, could limit available supply to the EU compared with pre-Brexit marketing seasons.
Participants across the rapeseed market are now monitoring crop conditions in producing regions, with many farmers holding back from committing to new-crop sales. UK crop conditions are rated 59pc good-to-excellent as of April, latest Agriculture and Horticulture Development Board data show — roughly in line with the previous three-year average of 61pc for this stage in the season. But recent dry weather across the UK and Europe could lead to some uncertainty, with producers awaiting forecast rainfall later this week to offer greater clarity on crop conditions.
Further afield, global RSO supplies could come under some pressure from a deteriorating Ukrainian production outlook and low Australian soil moisture levels.
