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Traders View 20th April 2012

Date Added: 20/04/2012

We remain friendly to new crop oilseed rape prices, but still have concerns about old crop demand.

Here is a summary regarding both crops

 

Old crop

 

1.    Biodiesel demand still poor, rapeoil recently traded from EU to India in order to clear some stocks. This may be longer term bullish as EU rapeoil must be relatively cheap against other origins for this to happen.

2.    There will probably be 850,000 tonnes of OSR exports from the UK this year, 800,000 of which is already committed.

3.    Some Australian cargoes have been diverted to Pakistan, but we still expect Australian cargoes to continue to be shipped to the EU over July and August

4.    EU OSR stocks are likely to be comfortable at the beginning of July due to poor demand.

5.    Once the May matif comes off the board at the end of April, we expect old crop and new crop prices to converge.

 

New crop

 

1.    Soya crops keep getting smaller in South America, Brazil – 65 milion, Argentina- 44 million, Paraguay – 4 miilion, this is over 20 million tonnes less than last year.

2.    Biodiesel demand should improve, supplies of soya methyl ester could be restricted from Argentina due to trade dispute between EU and Argentina over the government takeover of YPF.

3.    EU osr new crop downgraded to 18.5 million tonnes due winter kill and poor establishment. Botrytis could be a problem in Germany.

4.    Palm oil supplies restricted due to poor crops.

5.    There will be a battle for acres between soya and corn in the USA, this will support soya prices as soya needs to buy extra acres to get stocks more comfortable.

6.    OSR harvest prices look good in relation to the deferred positions, this could mean the spread widens as it will be difficult to ship the amount already committed for export.

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