Strong demand and a fine supply balance means oilseed rape prices are likely to remain firm for the remainder of the 2010 crop and beyond.
The UK started the season with a relatively small carryover of 40,000t and the crush would be higher this year than last, said Openfield’s John Thorpe at the group’s annual harvest review and outlook.
Ex farm prices recovered this morning (October 1) to between £309 and £311/t for November. The 2011 crop is not far off, at £295/t for harvest and £303/t for November 2011. Openfield estimates that growers have sold between 15 and 20% of the 2011 crop.
At a likely 2.23m tonnes, this year’s UK rape crop will be 17% higher than in 2009 and is benefitting from a poorer harvest in Germany, France and Poland. Exports played a large part in UK trade during July and August.
EU rapeseed production at just over 20m tonnes in 2010/11 is about 1.5m tonnes lower than last year. Oil contents in the UK were 1% to 2% lower than last season and each 1% drop in oil content represented a shortfall of 55,000t on UK seed or 500,000t on an EU-wide basis. Oil contents in France and Germany may be even lower than those in the UK, said Mr Thorpe.
The carryover to next season would be smaller and global demand was increasing. Against a background of world oilseed rape supplies being down by 5% this season, demand for healthy oils was increasing the use of rapeseed oil for human consumption, world demand for oils to produce biodiesel was likely to increase and people did not think that crude oil prices would dip to $60 a barrel again, he said.
Further firming factors included investment funds being attracted to soft commodities by their volatility and well as growing demand for soya bean oil in China. The current relative values of corn and soya beans were also encouraging growers to plant corn rather than soya beans.