Tight outlook for oilseeds
WHILE some of the volatility has disappeared from the oilseeds market for now, market commentators are agreed the market will remain tight and for oilseed rape growers, price prospects appear promising.
EU end of season oilseed rape stocks are likely to be at an all-time low of one million tonnes according to the HGCA. Market specialist Sidra Shaheen said the global oilseed market in general was expected to remain tightly supplied in the first half of 2012/13 following the US drought.
“This is accentuated by production issues both for oilseed rape and sunflower seed crops. However, if weather conditions remain favourable record South American soyabean crops could bring relief in early 2013,” she said.
“Oilseed rape and rape oil prices have been supported by the third consecutive year of suboptimal growing conditions in Europe. This has tightened the supply of rapeseed in the EU,” she said.
Although increased prices had reduced demand – the EU crush demand expected to decline by 0.59m tonnes in 2012/13 — ending stocks were nevertheless forecast to fall to a historically low level of just above one million tonnes.
“Export potential from the other major exporters is also likely to be lower this season,” she said.
At Gleadell, trading manager Jonathan Lane said the hitherto daily price swings of €10-15 (£8-£12) on MATIF rapeseed had not been seen as the market slowed down.
“Domestically, there is little coming forward from farms and the crushers are relatively absent from the market. UK rapeseed remains uncompetitive in the international markets, with UK domestic values offering better value than export markets,” he said.
But with soyabeans the main driver in the oilseeds market, Mr Lane said this crop was continuing to come under pressure from the US harvest and managed money funds closing positions.
“South American soybean plantings are reported to be progressing well with favourable weather conditions, a record South American crop is forecast for early next year with the harvest starting in February.”
HGCA analyst Jack Watts said coupled with a poor US soyabean crop, strong Chinese demand was keeping supplies tight for the world’s main oilseed.
“Attention is now shifting to South America, where farmers are expected to respond to high prices with record plantings. However, with these harvests some months away, the weather once again will remain a key driver.”