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Currency moves still the major factor

Date Added: 13/03/2015

By Owen Cligg, Trading Manager, United Oilseeds,

 

Prices of rapeseed in Sterling remain remarkably moribund at around £250.00 ex farm in most areas of England. As the euro has weakened against the dollar, prices on the Matif have risen to recent highs with the May Matif touching 370.00 euros. Unfortunately the £ has been caught in the crossfire and also hit recent highs against the euro, currently £1=1.403 euros. This means that any gains in the Matif have been counteracted by the stronger £, leaving prices very much in their recent range.

Fundamentally prices seem to holding up well. Crush margins are poor,as growers are not willing to release rapeseed at lower values, and European rapemeal and rapeoil values are slow to follow the higher matif. In $ terms, European rapeseed looks relatively cheap so it maybe that rapeoil export sales to India or China may soon provide some support.

As regards soya prices, the stronger dollar is having some negative impact. Also the Brazilian harvest continues apace and the recent truckers strike seems to be resolved. The only recent positive news for prices are the heavy rains in Argentina, which may impact on harvested area, reducing their crop size by potentially 2 million tonnes.

Looking forward, we are seeing mixed reports on the size of the EU 2015 oilseed rape crop size. In the UK, the latest Defra planting survey is only indicating a reduction of 1% in area, whilst ourselves and other traders still feel a 5-10% reduction is more appropriate. In Germany, the latest Cooperative Association figures are suggesting a 16% reduction in crop size, which contradicts other trade views that rapeseed plantings have come through the winter relatively well. All in all, the size the of EU crop could range anywhere between 20 to 23 million tonnes which, depending on which figure you believe, will obviously influence price direction in the medium to long term.

Regards,

Owen

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