Oilseed rape prices are holding after figures showed a sharp drop in the global area and proposals to restrict EU imports of South American seed for biodiesel.
Spot ex-farm prices on Friday (7 December) averaged almost £319/t, very similar to the previous week although trade is very quiet.
Estimates suggest 10% of the UK oilseed rape crop has been destroyed by drought and cabbage stem flea beetle.
Meanwhile in Germany and eastern European countries planting is down by more than 20% with the prospect of winter kill likely to reduce yields further.
Beyond Europe, the world’s second-largest exporter Australia is reported to have slashed planting with a 39% year-on-year drop, to a projected total yield of 2.2m tonnes.
Australian rape has accounted for 17% of exports over the past five years and the reduction is likely to affect global supplies, according to US Department of Agriculture data.
United Oilseeds (UO) trading manager Owen Cligg said ex-farm prices at £320-£325 for December to March, remained strong.
“Historically achieving over £300/t is a good price and with the drop in area planted we expect prices to be robust,” Mr Cligg said.
He added that 2019 crop harvest prices ranged from £310/t- £315/t while November 2019 futures were at £320/t.
This is a good level particularly as winter kill could yet reduce supply and strengthen prices still further, Mr Cligg suggested.
A further factor in the market has been political movement that could reduce the level of rapeseed imports from South America.
According to the AHDB and Reuters news agency the EU is proposing to restore anti-subsidy duties on Argentinian biodiesel imports.
“The proposal follows increased shipments of ‘low cost’ biodiesel from South America, which have proved challenging for the EU biodiesel industry,” the AHDB said.
While the move is just a proposal at this stage, developments will be watched closely in regard to the direction of the EU rapeseed market.
“A decline in biodiesel imports could lead to increased demand for EU rapeseed in biodiesel production,” the AHDB predicted.
Despite the market restrictions and strong prices UO is not yet urging producers to lock-in prices but instead suggests considering a pooling arrangement.
The group operates a pooling system where producers commit some amount of the crop area.
This allows a proportion of the pooled crop to be locked into a price with remaining stocks held back to capitalise on any future rises, he said.