ZCE rapeseed oil prices surge on weather woes

Zhengzhou Commodity Exchange (ZCE) rapeseed oil prices have risen sharply in recent days, driven by adverse weather in key growing regions and slow planting progress, which have fueled growing expectations of reduced yields. The most-traded rapeseed oil futures contract (OI2609) on ZCE extended its gains after breaking through the Yuan 10,000/tonne threshold, rising Yuan 354/tonne in daytime trading on June 3, 2026 to an intraday high of Yuan 10,352/tonne.

The sharp rally is underpinned by a confluence of abnormal weather events across the three major global rapeseed-producing regions, including Canada, the European Union, and Australia. Rising expectations of lower new-season output, coupled with higher international rapeseed costs, have pushed up China's domestic rapeseed oil valuations, which is the key factor behind the price surge.

Canada: Cold, Wet Spring and Late Frosts Delay Planting

Saskatchewan and Alberta, the world's largest rapeseed-producing regions, are currently in their critical spring planting window. Persistent cold and wet weather, combined with waterlogged fields and localized late frosts, have slowed planting progress to just 30% of the normal level, well below the five-year historical average of over 50%.

These delays have shortened the rapeseed growth cycle, significantly raising the probability of yield losses during the filling stage, should hot or dry weather occur. Agriculture and Agri-Food Canada has already lowered its rapeseed production and export forecasts for the 2026/27 crop year. Consequently, ICE rapeseed futures have rallied consecutively, raising CNF import costs to China and creating firm cost support for domestic rapeseed oil. June and July will be key months for determining Canadian output, and weather will remain a major price driver.

European Union: Heat and Drought During Flowering and Pod-Setting Trigger Repeated Downgrades to Production Forecasts

Major EU growing regions, including France, Germany, and Poland, are at the critical flowering and podsetting stages, which are key determinants of rapeseed yields. Since the start of summer, widespread heat and belowaverage rainfall have persisted, with soil moisture levels continuing to decline and effective rainfall severely lacking.

In response, two leading international grain and oil agencies have twice downgraded their forecasts for the EU's newseason rapeseed output. European spot rapeseed oil premiums have risen steadily, raising the global price floor for rapeseed. At the same time, steady growth in EU biodiesel demand is accelerating domestic rapeseed consumption, further tightening global supplies.

Australia: Rising El Niño Expectations Point to a 20% Drop in New-Season Production

Australia's rapeseed-growing regions are highly dependent on seasonal rainfall. With the probability of a global El Niño event increasing, weather agencies forecast significantly below-average rainfall and above-average temperatures from June to August, covering the Australian rapeseed growing season. Drought risks are rising sharply in the western growing regions.

The market has begun pricing in reduced Southern Hemisphere output, with Australian authorities estimating a 20% year-on-year decline in new-season production alongside shrinking planted area. Forward rapeseed premiums continue to widen, reinforcing expectations of tighter global supply in the coming months.

Consequently, higher international rapeseed prices are providing strong support to domestic imported rapeseed oil prices. The current pace of imported rapeseed arrivals is relatively slow, while new-season domestic rapeseed supply has increased only modestly. In some coastal regions, rapeseed crushing plants are still operating irregularly, contributing to temporary spot tightness.

On the forward curve, market capital is focused on pricing in lower future rapeseed output. The most-traded ZCE rapeseed oil contract (OI2609) saw heavy volume and rising open interest, surging 3.61% in a single day and breaking through the Yuan 10,000/tonne level.

In the short term, market sentiment may cool following the weather-driven price spike, but adverse weather continues to pose a yield threat to rapeseed, and rapeseed oil prices are expected to remain firm with an upward bias. In the medium to long term, as subsequent rapeseed shipments gradually arrive and crush volumes recover, rapeseed oil inventories are likely to rebuild, limiting further upside.