The first weeks of 2021 have seen a sharp rise in oilseed prices, with the UK’s firm currency helping support the increase. Supply concerns and brisk demand around the world are behind the bullish tone.
John Thorpe, senior trader oilseed rape at Openfield Agriculture described the market as “taking a breather as we speak,” after a rise of £13-£14/tonne since the beginning of February.
“If you are looking globally, you note that soybeans are firm because of concerns over global supplies,” he told Agritrade News, citing “weather conditions in Brazil that are slowing the harvest there”, adding to wet conditions in Argentina.
Turning to the UK Mr Thorpe observed that “when vegetable oil prices go up, crush margins improve. We have buyers but literally no sellers,” he added. “It is a very tight market at the moment.” It is increasingly difficult to source rapeseed. “You have to really ask yourself, with five months left to go, how much old crop is there really out there?” he asked.
“Markets don’t go in one direction all the time,” he noted of the short-term situation. “There’s a bit of profit-taking on MATIF. Where it goes from here I’m not sure.”
AHDB reported on 15 February that “rain has slowed the Brazilian harvest, which combined with planting in a drought, has meant its January soyabean exports (totalling 49,000 tonnes) were 28 times smaller than for January 2020.” In contrast the US had inspected 8.9 million tonnes of soybeans for export in January – the highest on record. The USDA’s Economic Research Service (ERS) said on February 11th: “Brazil’s slow start is extending the US shipping season by several weeks. Being the sole alternative, any continuation of Brazil’s delays could exert further upward pressure on US soybean prices.”
The Board also reported that “January rains eased dryness concerns, leading to Argentina’s Bolsa de Comercio de Rosario Grain Exchange increasing their soyabean crop estimate by 2m tonnes.” ERS commented that “conditions for some of the soyabean-growing regions have stabilised after above-average January rainfall.
“Currently, US soybean shipments are the dominant force in global trade,” ERS continued. “Few old-crop stocks remain in Brazil and little of the new crop has been harvested in South America. Consequently, recent exports from both leading export competitors have slowed to a trickle,” it added, forecasting that “the rate of new sales is expected to cool fast due to plunging soybean stocks, a sharp increase in prices, and an impending Brazilian harvest.”
The USDA also reported that Canada is shipping rapeseed at a record pace, with “not quite half,” of its exports destined for the EU-27+UK and China. “Now approaching the midpoint of the crop marketing year, EU importers have brought in nearly the same amount to date as they did a year ago,” it explained. “At the current rate of use, more EU-27+UK rapeseed imports have been needed to prevent an unusually low level of carryout stocks.”