Has uncertainty peaked?

We are still in a searching market. The dollar, the stock markets, oil... It all moves very fast and it is difficult to stay focused. On April 2, Donald Trump announced 'reciprocal' tariffs on imported products from all over the world. He later suspended them for 90 days.

The EU had planned countermeasures, but has also suspended them. With China things escalated to unseen levels. The result of all that violence was collapsing stock markets, rising bond yields in the US and a lower dollar. And although the impact on the world of oilseeds and oils seems limited for the time being, it remains volatile.

Of course, economic uncertainty remains, which hampers the dynamics of the market and consumption in general. The big question is not so much direct trade with the US, but rather how supply chains or markets will evolve. For example, would the rising tensions increase Chinese purchases of rapeseed (products) from Canada and Australia? Or rather from Russia, India and Ukraine?

That the cards will be reshuffled is a certainty, how the game plays out, remains uncertain. Producers, investors, supply chains… all hate uncertainty, and for some the level of uncertainty has reached epic proportions. But have we already reached the peak of uncertainty or is there more to come? It largely remains guesswork.

Euro / Dollar

Erratic US policies are undermining confidence in the US dollar, pushing the euro to its highest level in three years against the dollar and making European products less competitive internationally. The dollar's weakness pushed down prices of European agricultural products, while American products held up better thanks to their greater export competitiveness.

The ECB has also expressed concern about how the uncertainty surrounding rising trade tensions will affect growth, and expects inflation to continue to fall. A stronger euro and falling energy prices add to the disinflationary effect that current trade tensions are already having on the eurozone. In support of the economy, the ECB cut its policy rates by 25 basis points, bringing the bank deposit rate down to 2.25%.

Curiously, the dollar is on a downward trend against its main rivals despite a rise in the yield on 10-year US Treasuries. One of many important factors behind currency fluctuations is the difference in yields on government bonds from two different countries. The yield on 10-year US Treasuries rose above 4.4% on Monday, as new risks to US economic policy and political stability prompted investors to reposition themselves in gold and foreign assets. The yield on the 10-year German Bund (the eurozone benchmark) fell from 2.8 to 2.5% in one month, on demand for safe-haven assets and growing concerns over the independence of the Federal Reserve.

Investors are turning away from US assets, casting doubt on the long-term status and viability of the US dollar as the world's reserve currency. Another certainty demolished!

Petroleum and Biofuels

In the US, the market is still awaiting news from the US Environmental Protection Agency (EPA) concerning a possible increase of federal requirements for biomass-based diesel. This is mainly the EPA's future definition of the Renewable Volume Obligation (RVO) after 2025, plus the Internal Revenue Service's (US Treasury Department) Clean Fuel Production Tax Credit policy.

A shift from a blender's tax credit to a producer's tax credit threatens to alter trade between the US and Canada. And multiple (bipartisan) legislative proposals have been put forward aimed at increasing blending obligations, but also at making only domestic feedstocks and productions eligible for subsidies/tax reductions, thus excluding imported (e.g., Canadian) feedstocks and biodiesel. The uncertainty impacts investment decisions across the sector.

Palm Oil

Data from the Malaysian Palm Oil Board indicate production, stocks and exports of palm oil to have bottomed out in February. March production rose about 17% and total stocks rose for the first in six months, by about 3%. As could be expected, together with the “tariff turmoil and economic challenges” this led to lower prices, making palm oil again competitive vs. rival oils on world markets. Palm oil may very well be on its way to very soon regain lost global market share to soybean oil which could keep a cap on soy oil prices.

For first half April, cargo surveyor data showed Malaysian palm oil exports month on month rose about 15%. India’s palm oil imports increased substantially in March and are expected to climb further in the coming months on falling edible oils & fats inventories and lower prices. Firmer petroleum prices too limited losses and if lower prices attract more buying, stock buildup may take somewhat longer to fully materialize.

Nonetheless, last week, futures posted a third straight weekly loss of nearly 12% over three weeks. Last Friday, “July ’25 Palm Oil Futures” closed just under the Myr 4000/mt level, at Myr 3975/mt.

Soybean oil

In Chicago, the soybean complex gained on the back of a weak dollar, on reports that China is open to trade negotiations with the US, and on planting delays. After a dry period, heavy rains are expected in the US the next fortnight, bringing much-needed moisture to the soil, but which could further delay plantings, probably well into May for the most part.

A recent NOPA report suggests a rise in US oil consumption due to increased biodiesel production in March, which led to a drop in soy oil stocks and which was also supportive to the complex. However, a prolonged period of “low margins for biomass-based diesel”, combined with continuing policy uncertainty, has pushed biodiesel producers into (some temporary) closures and reduced capacity utilization. Moreover, provisional EPA statistics suggest a significant drop in production in the first quarter of 2025. It is difficult to say how this will play out.

According to the Companhia Nacional de Abastecimento (Conab), the Brazilian harvest as of April 13 stood at 88.3% complete, compared with 83.2% for the same period last year and 87.4% for the five-year average. And the Brazilian Association of Vegetable Oil Industries (Abiove) lowered its soybean production forecast for 2025 by 0.8% to 169.6Mmt, but still up 10% on the previous year.

In Argentina, the Buenos Aires Grain Exchange announced last week that the soybean harvest was around 5% done, well below the 31% average for this time of year, as recent rains have delayed harvesting. The Exchange also confirmed its soybean harvest forecast at 48.6Mmt, despite delays and earlier weather concerns. A more pessimistic forecast of 45Mmt is also circulating in the market.

These large inventories in South America continue to weigh on the market. And now, so does cheaper and more competitive palm oil.

Rapeseed oil

Prices for old-crop EU rapeseed have stabilized. Generally, the market is sluggish, and the general slump in the international oilseed complex is weighing on prices. Fears for a global economic recession also caused a sharp drop in petroleum prices, to their lowest in four years, and consequently weighed on the entire biofuel sector. At the same time, the EU remains well supplied by imports of Canadian and Australian rapeseed.

The closure of the Chinese market to meal and oil from Canada has reportedly led to a return of Chinese buyers to Australia, which could in fact reduce the availability of this source for EU importers.

Old-crop rapeseed prices had an upward reversal, supported by the strong price of Canadian rapeseed but also because old crop (non-gm-Eu) inventory is dwindling fast. Old crop rapeseed was also not affected much by the stronger euro, because the supply is already limited at the end of the season (MJJ).
Driven by continued strong exports, Canadian prices returned to their levels prior to the announcement and implementation of 100% Chinese import duties on meal and oil! The US tariff exemption boosted Canadian optimism, and export prospects to EU remain high.

New EU crop approaching quickly.

The crush in EU is more and more crushing imported GM-rapeseed as the shortage of non-gm-seed is very tangible and supporting prices. Demand for non-gm-rapeseed (+meal and oil) is high, which stabilized prices. Old crop is growing an inverse vs. new crop: last week, May ’25 rapeseed futures settled at €535/mt and August at €477/mt. The new crop did not yet generate much interest at the moment, and the generally favorable weather is not encouraging buyers to rush.

In 2025, UK rapeseed production is expected to fall to less than 750,000 mt, a further decline from the record low of last year. Rapeseed acreage is less than 250,000 ha as farmers increasingly opted to “set-aside under agri-environmental schemes”. With domestic production accounting for less than half of domestic consumption, the UK is becoming even more reliant on imported rapeseed oil and rapeseed meal and rapeseed for crushing.

In France, with 1.29M ha the acreage of ​​winter rapeseed this year would be 7.4% higher than the previous five years average, despite a 3% decrease year on year.

For EU-27, the area to be harvested this year is currently estimated at 5.893Mha compared to 5.723Mha in 2024.

Further away the market will watch potential global trade flows changes which could disturb the European supply as EU will stay a big net importer of rapeseed.

Sunflower seed oil

April saw an increase in crushing activity and sunflower oil prices have eased slightly, albeit less significantly, compared to palm oil, for example, whose price has dropped significantly. The big premium over palm, soy and rapeseed oils continues to make it expensive.

In Argentina, the harvest is over and crush is in full swing. In Ukraine and Russia, then in the EU, the sowing season is about to start. Ukrainian farmers have recently been more active in their sales, with the sowing season underway. Expectations for the new crop are high in Ukraine, with a record production potential next year if conditions remain favorable. It's still a long way off, and we can dream, but if it does materialize, sunflower oil could struggle to maintain its premium over competing oils. The crop is only realized when it is from the land and in storage. Experience of the past seasons reminds us that “a wise Russian proverb warns against selling the skin of a bear that is still roaming the forest.”

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