Oilseed rape futures reached fresh contract highs on Tuesday (18 January), following a very bullish report by the US Department of Agriculture last week.
Paris futures peaked at €521.25/t (£438.60/t) for February, before closing down at €517.25/t (£435.24/t). Strong demand for rapeseed, and extremely tight global soyabean stocks were behind the rise, said traders.
“The USDA report cut soya bean supply forecasts to precariously low levels,” said Jonathan Lane, trading manager at Gleadell Agriculture. “It reduced 2010 ending stocks to absolute minimal levels, and this places a huge amount of pressure on 2011 production if the world isn’t going to run out of soya beans.”
The UK rapeseed market followed the US market higher, before slipping back to £412/t ex-farm for January. Although UK compounders were now reducing rapeseed inclusion in their rations, crush margins in Europe remained good.
“We still need to see some significant rationing in demand if the EU isn’t going to run out of seed. Given the current supply and demand picture, we can still see prices going higher from today’s already high levels.”
New crop markets were also bullish, with increased demand for bio-fuel production and average looking crops likely to keep supply balances tight.