Oilseed rape prices slip back from peak

Harvest pressure appears to have brought a halt to the recent rally in oilseed rape markets, although the situation remains finely balanced.

Prices have eased slightly from the contract highs reached at the beginning of August, with traders reporting harvest prices of £280/t to £285/t ex-farm, depending on region, and a £10/t carry to November.

Futures markets were also down from their peak at the time of writing. Oilseed rape for November 2010 delivery was worth €375/t on the French Matif market on Tuesday (17 July), down from a high of almost €380/t last week, but still well above its July level. The February 2011 value was slightly off its peak at €377/t.

With the UK rape harvest estimated to be 85% complete, reports suggested that yields had typically been above average at 3.1-3.9t/ha, but there had been high variability and a large area was still to be cut in parts of northeast England, Scotland and Wales.

News of better yield prospects for the Canadian canola crop had added a bearish sentiment to markets, but that was countered by industry predictions of an EU-27 crop of less than 20mt, suggesting that the rapeseed supply and demand balance remained tight.

“The market has eased back a bit from the highs, but demand for rape oil remains good,” United Oilseeds trading manager Owen Cligg said.

The UK crop may have fared ok, but he said production in France and Germany – the two major OSR producers in Europe – was likely to be well down on last year at 4.5mt and 5.6mt respectively.

“It looks increasingly likely that the EU will have to import a reasonable amount of rapeseed this season, although we don’t really know where this will come from at the moment. There are issues with GM use in Canadian canola, so it may be that Australian crops are needed to make up the balance, although harvest there is still some way off.”

New EU Renewable Energy Directive sustainability regulations, coming into force in Germany from 1 January 2011, also made it increasingly unclear where EU processors would source seed from, Gleadell Agriculture trading manager, Jonathan Lane noted.

Rapeseed prices should remain supported in the medium term, he said.

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