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An acute shortage of rapeseed supply across Germany has made securing feedstock problematic for oilseed millers and processors and threatens to hit the sector’s profitability, market sources told AgriCensus.

The situation followed poor seasons in main producing regions which had slashed global production, the 14 January report said, with trade sources estimating that the country needed to secure 1.4M tonnes of feedstock supply to maintain operations.

“German oil mills are in a critical situation because they are not getting the oilseed material needed for processing,” Stephan Arens, from Germany’s Union for the Promotion of Oil and Protein Plants (UFOP), told AgriCensus.

The crisis comes against a backdrop of multi-year high rapeseed oil prices, which had further promoted oilseed processing amid good crush margins.

The rapeseed shortage followed a smaller-than-expected rapeseed crop last year, AgriCensus wrote, where output dropped 7% compared to the five-year average, while a drought in Canada had cut production there, drying up a major resupply option for the continent.

Weekly deliveries of rapeseed to the European Union (EU) as of 9 January have dropped 33% for the season that started in July 2021, at 2.56M tonnes, according to the latest Eurostat data.

“Rapeseed in Europe is in very short supply and those that aren’t covered are going to be in trouble,” a trade source said.

The current high rapeseed prices have led to farmers to contract a larger proportion of their crop, according to the report, further underpinning feedstock prices.

In a typical year, farmers sell about a third of their crop in forward contracts, according to market sources. However, this year German farmers had sold about 50% of the crop due to be harvested this year, they said.

While the rapeseed crop in Germany was expected to see an expansion of about 80,000ha – a 9% rise compared to last year – many factors affected yields, such as high fertiliser costs and insect problems, AgriCensus wrote.

“There are too many unknown factors at the moment and speculation is very high,” Arens added.

Germany is Europe’s leading rapeseed producer.