New-crop oilseed rape prices climb to pre-harvest records

New-crop oilseed rape prices put on about £30/t in the week to Wednesday (21 April), to give a regional spread of harvest values from £400-£415/t ex-farm.

Rising prices over the past few weeks in the cold, dry spring have made growers very reluctant sellers.

New-crop prices are supported by a tight outlook for both the UK and EU crops. Grower co-op United Oilseeds puts the UK area at a historic low of 300,000-340,000ha, while the EU harvest is forecast at 16.1m tonnes, well down on the “normal” 20m tonne-plus crop. This historic production figure includes the UK contribution of 1-2m tonnes.

Oilseed rape market factors

  • Tight global oilseeds supply on strong demand, although some uncertainty on China figures
  • Low UK and EU acreage
  • Cold, dry spring pressuring yield potential; some crops in Essex, Hertfordshire and Bedfordshire being scrapped
  • Ukrainian OSR area forecast 20% lower than for harvest 2021, and 60,000t of exports from this origin going to Canada instead of more usual EU destinations

However, traders say that at current price levels, it would be sensible to bank some known values.

“We’re in a weather market – consumers want to buy, growers don’t want to sell,” said United Oilseeds trading manager Owen Cligg. “But at £400/t-plus ex-farm it would make sense to book some tonnage.”

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While there is still scope for timely rains in May to help the crop, the UK will probably produce in the region of 1m tonnes of OSR, when 2m tonnes are needed.   

“Nothing goes up forever – there could be a correction,” said Openfield’s senior oilseed rape trader John Thorpe. “But the fundamentals are that there is a global shortage of oilseeds, so it will be supported.

“Every day the Matif [French OSR futures market] is recording new highs, and November has got to £430/t ex-farm. It’s going to be a difficult one to trade. I can see an upside.”  

Aside from the UK and EU perspectives, world vegetable oil use is expected to rise slightly this year and Chinese demand for soya beans is strong at a time when global stocks are low and cold weather in key US soya bean-producing areas is causing concern for crop prospects.

Possible negative influences include the effect of the Covid-19 pandemic on global economies, including India, and uncertainty about the rate of China’s economic recovery.

UK imports OSR from Uruguay

Mr Cligg noted that there have been some interesting trade flows in oilseed rape this spring, with 60,000t of Uruguayan OSR landing in Liverpool recently, while Canada has bought new-crop OSR cargoes from the Ukraine for the first time.   

Tight global grains markets are attracting a high level of speculative investment as a result of uncertainty over crop areas, harvest and demand.

This has led AHDB senior analyst James Webster to warn that any improvement in crop conditions, more US hectares or risks for the Chinese pig herd could see futures prices fall quickly. This would be likely to have a knock-on impact on oilseed rape markets.

Old-crop stocks

Much of the old-crop stocks still on farm is spoken for, so short supply and high crush margins are likely to support old-crop values in the run-up to the end of the crop year.

While some of the larger customers say they are covered until the new crop arrives, others are still looking for seed, said Mr Thorpe.