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Volatile Markets Become More Difficult To Read

Date Added: 08/07/2016

This week has seen a big sell off in Chicago soybean prices as traders returned from the long Independence Day weekend seeing less weather threats as rain began to fall in dry areas of the US. Losses in soymeal were exacerbated by flooding in China which gave the perception that some of the Chinese pig herd was under threat by drowning which would in turn reduce demand for soya. Although this sounds farfetched, Chinese soymeal futures fell 5% in 30 minutes which could be a function of the many small investors with potentially little real understanding of the market. Fund selling has also been a function of the US market but it has been widely acknowledged for a while that soyabeans have been overpriced against other proteins and cereals.

Rapeseed prices have been under pressure in euro terms as the Matif has continued to fall following soyabeans, albeit at a reduced rate. However the weakness of sterling, £1=1.17 euros has mitigated these losses and UK rapeseed prices are holding between £270 and £280 ex farm for harvest, depending on location. A sizeable export program of UK rapeseed is now lined up and we are expecting this to support prices. A lack of sunshine in June is also a concern, which would make last year’s pleasing yields somewhat unlikely.

Regards,

Owen

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