Traders View 14th January 2011

Date Added: 14/01/2011

Confused Signals

The oilseed rape market has given up some of its recent gains and now seems to be looking for some new direction.

Confused Signals

 The oilseed rape market has given up some of its recent gains and now seems to be looking some new direction.

 On Wednesday there was a bullish USDA report that reduced US stocks of soya and corn causing both markets to advance accordingly. The rapeseed market followed reluctantly but has since given up those gains and some more. This has been exacerbated by a stronger euro versus the dollar as German inflation data and well received bond auctions have strengthened the euro accordingly. The reaction to these currency movements has seen the Paris Matif market lose up to 15 euros. On the positive side the strong euro has caused sterling to weaken which has mitigated some of the losses that would have otherwise been apparent from the lower Matif.

 The general outlook seems to be that vegetable oil prices should still be supported whilst there is a question mark regarding the Argentinean Soya crop. However rapeseed could be overvalued in the old crop position as there is likely to be a big import program of Australian rapeseed despite the flooding problems there. Conversely new crop oilseed rape looks relatively cheap when comparing the value of forward soyoil to rapeoil.

Owen