We are expecting the rapeseed harvest to start next week in the UK and, at present, yield prospects are still in doubt. On the face of it, crops look ok, but with rapeseed you never really know until combining begins.
Yields from France are generally being reported as average to good, but their smaller area means supplies will be well down.
The main feature in the market over the last week has been the explosion of canola prices in Canada as yield prospects have been severely dented. Commentators are reporting that hot dry weather during flowering is severely diminishing yield prospects, so a potential crop of 20 million tonnes may reduce to 15 million tonnes. This would severely dent a Canadian exportable surplus which would normally be around 10 million tonnes. The repercussions, if realised, would likely mean the import tonnage from Canada and Australia into the EU would be lower.
In fact, rapeseed from Ukraine, which normally trades into the EU, has already traded into Pakistan - so again limiting the potential imports available. This scenario suggests Canadian prices are currently at too high a premium to EU prices, when normally the EU is a premium to Canada.
Harvest prices in England are currently hovering around £450 ex farm, but both downside and upside potential is clearly evident in this volatile market.
Old crop bean demand is diminishing as other protein sources are better value.
New crop compounder is appearing, but with a larger crop possible and limited export demand, it maybe sensible to lock into current values of around £25/tonne over November feed wheat futures.
The AHDB June survey suggests oat plantings are up 1% over last harvest, but this increase is due to higher plantings in Scotland. Oat millers are relaxed about forward pricing as they perceive the market will need to sell at low prices for movement.
A likely crop of well over 1 million tonnes suggests we will need to find export markets to balance supply and demand. The current poor crop conditions in Chile and Canada do however suggest export demand for UK oats could well develop once quality is known.
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