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Currency movements wrong-foot markets

Date Added: 16/01/2015

By Owen Cligg, United Oilseeds Trading Manager

Rapeseed prices came under pressure this week as sterling strengthened against the euro, due the Swiss National Bank announcement breaking their previous link with the euro. Values have subsequently fallen to an ex farm range of £250 to £258 ex farm depending on area.

Whilst the weaker euro is supporting matif rapeseed futures values, the strong dollar has impacted negatively on soyabean values. This combined with the lack of any immediate weather threat to the South American crop has caused March soyabeans to fall below the pivotal $10 mark. Commentators though are still reporting a lack of farmer selling, whether it be soyabeans or rapeseed that is helping to support values.

Our opinion is that rapeseed values are likely to find support from stronger vegetable oil markets as palm oil and soy oil supplies could remain less than expected. The main danger to prices could be a sell-off in proteins as large soymeal supplies eventually hit the market. The current low milk prices will no doubt keep farmers and compounders from taking forward cover on rapemeal prices.




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