Oilseed prices have risen dramatically over the past year, mirroring gains in corn and other grains over this period. While tight supplies precipitated by production shortfalls in corn and oilseeds and rising vegetable oil prices are important factors, so is the turnaround in China demand for oilseeds and grains.
There have been dramatic shifts in the direction of China oilseed imports over the past 5 years that roughly correlate with price movements. Import demand began to decline in early 2018 in response to restrictions placed on Canada rapeseed and U.S. soybeans and accelerated with the onset of African swine fever (ASF) and its effect on hog numbers.
These events led to significant soybean stock‐building in the United States and rapeseed stock growth in Canada, which helped depress prices to the lowest levels in nearly a decade.
With ASF outbreaks waning and pig numbers rebounding, the pace of China’s demand began to turn positive, matching the growth rates seen earlier. Taking advantage of low prices in mid‐2020, China’s increased purchases of U.S. soybeans and Canada rapeseed and products contributed to a rapid drawdown in these exporters’ stocks and to price appreciation.
With stocks of Canada rapeseed and U.S. soybeans currently at minimal levels, prices are expected to remain high in the coming year. Price levels will ultimately be influenced by the size of the upcoming harvests and the pace of China imports through early 2022.