The Trader's view 24-12-10

Date Added: 24/12/2010

Oilseed rape values at historic highs

We are finishing the year with oilseed rape values at historic highs.  A combination of a poor EU rapeseed crop with good demand for biodiesel has meant prices have exceeded our best expectations.

The sustainability criteria that the EU has introduced have helped strengthen the demand for biodiesel.  Rape oil is now trading a significant premium to soy oil, and whilst a question mark remains regarding the forthcoming Argentine soy crop the whole vegetable oil complex is likely to remain strong.

The oilseed rape prices available for harvests 2011 and 2012 now represent a good return against the cost of production. We would not deter any growers from locking some of their production against these prices. However given the discount against current values we do think there could be some more upside in price as the forward demand for rape oil and rapemeal is unlikely is fall away soon.

We take this opportunity to wish you all a Happy Christmas and a Prosperous New Year.