Tight supplies and Chinese buying have sent the UK and European rapeseed markets sharply higher in recent weeks.
“It’s been on a steep upward trend since the end of January,” David Whyte, trader at United Oilseeds, told Agritrade News. “We have seen the old crop Matif futures rise €117/tonne in that time, mainly because of lower stocks and high vegetable oil prices; good Chinese demand; and a lack of EU oilseed rape – all factors that have been in place for the last six months, in some respects.
“Certainly, the market seems to have found a level at the moment,” he continued. “There was a little bit of profit-taking last week when the USDA WASDE numbers came out. It dropped about €20/tonne, but it has recovered all that now.
“The market just seems to be holding its own,” Mr Whyte added. “Currency-wise, sterling has moved from a little bit stronger to a little bit weaker, which has had a subsequently slightly positive or slightly negative effect on things.
“Overall, the UK market is in a fairly bullish frame of mind,” he noted. “There is not a great deal of old crop rapeseed out there, so it is in strong hands.” He pointed out that “one or two merchants have still got stores that need to be emptied.”
Turning to new crop prospects, Mr Whyte commented: “There is variation, as there always is at this stage, in how some of the crops look. Some are romping away, some are looking pretty sick.
“We know we that there is a smaller area in the ground than for harvest 2020, but the hope is that yields are going to recover from last year to perhaps average 3.25 tonnes a hectare. Then, despite the smaller planted area, we would have a greater tonnage to trade – but still not enough to reach self-sufficiency,” he suggested. “The UK and the EU would still have to import supplies.”
Australia is one potential source of those imports. “Australia is anticipating a similar oilseed rape crop area to 2020, but the chances of it producing a similar level of yield to what they did that year is year is slim,” Mr Whyte observed.
“With Australia having less oilseed to trade, that in itself could tighten things up later in the season.
“It is difficult for people to talk the market down at the moment,” he commented. But global trade attention is now turning to the USDA’s area estimates expected at the end of March. “We may get a better idea of what the US farmer is planning on drilling,” he said. “People seem to think there’ll be 90 million acres of soybeans. That is the plan, subject to weather, changes in crop values and the cost of inputs. “Only time will tell as to whether they decide to grow more soya than last year or less,” he thought.
“It is relatively quiet on the old crop buying side of things,” Mr Whyte concluded. “Meanwhile, growers are setting their numbers pretty high when engaging with their new crop marketing. As usual, some are quite fanciful, with some a bit more sensible.”