20 June 1998

RAPESEED RETURNS

OILSEED rape could come bouncing back under Agenda 2000 and dispel the threat of hedge-to-hedge wheat, argues the HGCAs Steve Thornhill.

A worse option for rapeseed is continuing with the present system, incorporating penalties, which would leave growers poorer at a time when world stocks of vegetable oils are falling and demand is expected to keep prices firm.

As they stand, the Agenda 2000 proposals cutting rapeseed aid to the same level as cereals could actually mean a rise in aid in 1999 and 2000 since the production penalties are also to be dropped. "Rapeseed – compared with other crops – is not badly treated by the proposals," says Mr Thornhill.

He points out that rapeseed needs to be double the wheat price to keep margins attractive. Thats equivalent to a world price of $250/t – below the five-year average of about $300/t.

Taking into account the lower gross margins from second or continuous wheats, and the benefits to the

RAPESEED RETURNS

OILSEED rape could come bouncing back under Agenda 2000 and dispel the threat of hedge-to-hedge wheat, argues the HGCAs Steve Thornhill.

A worse option for rapeseed is continuing with the present system, incorporating penalties, which would leave growers poorer at a time when world stocks of vegetable oils are falling and demand is expected to keep prices firm.

As they stand, the Agenda 2000 proposals cutting rapeseed aid to the same level as cereals could actually mean a rise in aid in 1999 and 2000 since the production penalties are also to be dropped. "Rapeseed – compared with other crops – is not badly treated by the proposals," says Mr Thornhill.

He points out that rapeseed needs to be double the wheat price to keep margins attractive. Thats equivalent to a world price of $250/t – below the five-year average of about $300/t.

Taking into account the lower gross margins from second or continuous wheats, and the benefits to the rotation of oilseed rape, Mr Thornhill takes the opposite view to those pundits arguing the case for near-total wheat domination in the UK.

However, rapeseed is highly dependent on the world market for setting pricing and demand. The HGCAs market information department is launching MI Oilseeds, a £45 weekly bulletin aimed at some of the 14,000 oilseed levypayers.

QUALITY MATTERS

SHOWERS at Cereals 98 focused millers minds on quality prospects for this harvest. "Were seeing Group 1 premiums of £16/t now; whether this level is seen at harvest will depend on grain quality," says Peter Jones of Rank Hovis. "We need more sunshine and a little less moisture from now on."

Commenting on the wide range of varieties now in the moderate breadmaking, Group 2 category, Mr Jones agrees that premiums have been variable in this sector – particularly towards the end of the season. "But its always a case of supply and demand."

Alex Waugh of the milling body NABIM welcomed the expansion of the Group 1 and 2 milling categories. "The choice of varieties has increased, as has the area down to milling and biscuit wheats which is now up to 65%. This has happened at the expense of feed wheats, which is good news for growers, because it gives them a wider range of potential markets for their grain."

Feed wheats will now make up about 35% of the tonnage for this harvest. In 1996 feed varieties covered more than half the UK wheat area.

POOL PROMISE

BEARISH news from the US on the possible size of the cereal market there has added to pressure on prices. Trader Gary Sharkey of BDR Agriculture reckons UK feed wheat at harvest could be down to £60/t.

He reports "huge interest" in the companys grain pools, as growers look for help to protect their marketing margins.

But theres some good news in prospect. The Intervention Board may allow merchants to use their own stores to hold official intervention stocks, which would stop intervention grain being hauled long distances. "This would give us a market to work for on growers behalf at harvest," said Mr Sharkey. The only snag might be that rape or wheat might be more difficult to move at harvest.

Premiums have been variable in the breadmaking sector – Peter Jones.