By FWi staff
OILSEED rape prices have plummeted over the past week, falling £14/t, with ex-farm prices now at £143/t.
Values are continuing to fall, said one trader. “And theres no sign theyll stop.
“Producers should have sold when prices reached £160/t last year, although its too late to look back now,” he said.
There are a number of factors that have contributed to this fall, said John Duffy of Gleadell Banks. With produce on the world markets cheaper and a lack of buyer interest, prices have tumbled, he said.
The devaluation of the Brazilian Real caused rape values to drop. Even after export costs have been accounted for, South American rape is $20/t (£12/t) cheaper than domestic stocks.
The situation was made worse when the Chinese imposed a 13% import duty at a time when a number of countries were hoping to do business with them, said Mr Duffy.
Australian imports are expected in the UK for the middle of next month, and the rape oil buyers cant sell the oil, he said.
“Were in a situation where the market will just keep going down. I cant see any reason for it to come back up.”
Mr Duffy believes that theres still rape left to trade. And a complete lack of sellers would be the only thing to bring it up, said Mr Duffy.
“Few people saw this coming,” he said.
Crush margins are also suffering, and are well below those recorded a year earlier, despite recent falls in seed values, said Home-Grown Cereals Authority economist Heike Hintze.
“If margins are to improve, seed prices need to fall or oil prices to rise,” she said.
Lower prices should also boost the competitiveness of UK rapeseed. But traders estimate that as much as a third of last years crop is still in store, said Ms Hintze.
And theres an estimated 400,000 tonnes of canola expected in Australia and 60,000 tonnes is said to be on its way to the UK.
The situation doesnt look brilliant, she said. “Many traders are not optimistic, but it all depends on what is going to happen to the South American crop over the coming weeks.”