Oilseed prices set to recover

By FWi staff

RECORD low rapeseed prices this season are unlikely to be repeated in 2000/01.

Prices are already rising, and market signals suggest the improvement may be sustained.

This note of cautious optimism was injected into an HGCA/United Oilseeds rapeseed marketing conference in Peterborough by HGCA economist Heike Hintze-Gharres.

She outlined the possible reasons for the price bounce and warned growers to expect market volatility.

“Following unattractive prices and the prospect of lower area aid under Agenda 2000 for oilseeds, UK farmers have planted less rapeseed for harvest 2000, reversing the trend seen over the past two decades,” she said.

Last year, a record 1.7 million tonnes was harvested. But the current area is estimated to have fallen by up to 25%, pointing to a crop of 1.2-1.3m tonnes.

Other EU countries have also planted less. Estimates suggest a total yield of about 10m tonnes, well below last years record of 11.5m tonnes, though still the second biggest crop on record.

Global oilseed production is also set to fall by a predicted 7% to 39m tonnes.

Reliance on soya beans will increase in 2000/01, especially since global demand for oilseeds is expected to rise further.

“Given a tighter supply situation for next season a positive impact can be expected on the vegetable oil sector.

“Stocks are expected to fall and production growth to slow while consumption, mainly in Asian countries, is estimated to remain high.”

Lower production and low carry-over stocks will ensure that the 2000/01 rapeseed balance will be tighter than last year, she added.

EU exports of 2m tonnes in 1999/00 would have to nearly halve to ensure a crush of 9 million tonnes.

The potential fall of 400,000- 500,000t in the UK might mean more imports were needed next season to maintain a 1.5m tonne crush.

Such sentiments have boosted new crop prices. The October/ November forward price is 126/t compared with 118/t at the beginning of the year, said Ms Hintze-Gharres.