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Old crop / new crop spread widens

Date Added: 11/04/2014

By Trading Manager Owen Cligg

 

The oilseed rape market has gone up on old crop and down new crop this week. This is despite poor crush margins on the old crop which will ultimately mean processors will need to slow down the rate of crush. The main reason for the disparity is the expiration of the May Matif rapeseed position on 30/04/14, where there is a large open position of nearly 1 million tonnes. The shorts are now being forced to pay up to close their positions unless they have the ability to tender. It is possible some of shorts may only be able to get out of their position by buying May and selling August to unwind existing spreads.

The spread has now gone to €50 which is historically very high. This has in turn put pressure on new crop prices, though the fall in matif is being mitigated by a fall in sterling to £1= €1.205. Currently old crop oilseed rape is valued at £330 ex farm whilst new crop is in the region of £280.00 ex farm.

Meanwhile the USDA report on Wednesday confirmed a very tight US soya balance sheet which initially supported prices. Since then though, soya prices have come down as rumours continue to circulate regarding poor crush margins and problems of credit in China.

Regards,

Owen

 

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