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USDA report alters sentiment

Date Added: 14/07/2017

Trader's View: by Owen Cligg, Trading Manager, United Oilseeds

UK oilseed rape prices have endured a volatile week as early strength due to the US drought was lost due to a bearish USDA report. On reflection we were not expecting the USDA to dramatically change projected corn and soya yields as it is still early in their season.

However. the market was looking for a reduction and when it did not occur the corn and soya markets sold off accordingly.

In our opinion the reduction in yield is more likely to come in the August and September reports when the impact of the lack of water is more quantifiable.

UK oilseed rape prices for harvest are currently around £305.00 ex farm having been up to £315.00 ex farm earlier in the week. Yields of oilseed rape are improving with many instances now over 4 tonnes per hectare. The latest AHDB survey is estimating plantings at 4% down at a total of 553,000 for England and Scotland. If average yields turn out at 3.8 tonnes per hectare this will put production at 2.1 million tonnes. This should put the UK market in balance when accounting for the extra demand to the new Stratford crushing facility.

The market generally is likely to find sellers short term as rapeseed yields seem better than expected throughout Europe. On the positive side lower than expected canola production in Australia and Canada should provide support, whilst continuing weather problems in the US will put the market on alert for any diminishing soya production.

One reason for concern is the likelihood that duties on imports of Argentinian and Indonesian biodiesel could be removed in September, which could reduce the value of European produced biodiesel from rapeseed.

With biodiesel markets becoming more uncertain post 2020, United Oilseeds are looking to promote alternative uses for rape oil. One such development is our increasing involvement in the HEAR market. For further details, please click on the following link showing our offer for 2018 harvest contracts.

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