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Trader's View

Date Added: 30/01/2015

Prices on the defensive as currency and crush margins cause prices to drop

 

By Owen Cligg, Trading Manager, United Oilseeds

 

UK prices of oilseed rape have backed off this week as sterling remains strong and poor crush margins have caused the Matif to fall. Prices for February are generally in a range of £240 to £245 ex farm, whilst harvest rapeseed is valued at around £240 ex farm.

Earlier in the week the Greek election result further strengthened the £ against the euro, currently £1=€1.33  however the euro's demise versus the $ seems to have temporarily halted and values remain around €1 euro = £1.13. Whilst the euro was falling, this supported Matif prices, but once currency stabilised and sellers looked at poor crush margins the Matif fell rapidly.

Matif prices did recover on Thursday but losses remain for the week. Vegetable prices have taken a bit of a battering as the US is looking to allow Argentinian biodiesel imports against its renewable energy system. Also, Friday saw lower soyabean values as a weakening Brazilian Real made their exports that much more competitive.

The break in prices may have come a little earlier than expected, but soybean demand still remains good and lower vegetable oil prices seem to be creating extra buying interest. It would not surprise us if soyabean prices continue to fall before finding renewed interest as South American logistics struggle with their large crop. However, prospects for rapeseed could be more optimistic as world crop size is likely to be lower next harvest which should help support values. Combined with a frost risk to Eastern European crops,we think this means the downside for rapeseed prices should be limited.

Regards,

Owen

Pic: SY Harnas oilseed rape variety growing in Cambridgeshire, England

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