The oilseed rape market outlook is unclear and low prices mean growers have sold very little new crop forward.
According to Owen Cligg, trading manager at United Oilseeds, farmers had probably sold less than 5% of the 2015 crop so far.
“Prices are stuck at about £240/t ex-farm, and most farmers don’t want to sell below £250/t,” he said.
In the short-term, the outlook for markets was fairly bearish, with a record South American soya bean harvest under way, and US farmers likely to plant another large area this spring.
“That could well weigh on global prices,” said Mr Cligg.
On the upside, the EU rapeseed crop was set to decline from about 24m tonnes to about 22m tonnes, and with good Chinese demand for Australian canola, the supply and demand balance for rapeseed could be positive.
“Fertiliser remains expensive, which could lead farmers to reduce inputs in places such as Ukraine, which would potentially impact on yields,” added Mr Cligg.
“And between now and harvest there’s still scope for potential weather problems around the globe.”
However, Jonathan Lane, trading director at Gleadell Agriculture, said the large EU carryover would go some way to offset the smaller planted oilseed rape acreage.
“The EU carryout will be between 1.2m and 1.5m tonnes, compared with 800,000t last year,” he said.
“Crush margins are poor, and if the crushers can use soya, they will do.”
Low crude oil values were also putting downward pressure on the biodiesel sector, but with the looming election, volatile currency and unpredictable weather, the market could go either way, he added.
“Compared with the five-year average price of more than £300/t, today’s prices look pretty sick. But within that has been a range from £210-£410/t. It’s a very tough one to call.”