OSR rising, but market may run out of steam
OSR rising, but market may run out of steam
OILSEED rape values continued to improve this week, on the back of a firming US soyabean market, with ex-farm prices topping £110/t for the first time this season.
But while the upturn has been welcomed, traders are warning that what is essentially a weather market could soon run out of steam.
Recent figures from the US Department of Agriculture highlight the effects of the drought now pushing into the soyabean growing mid-west. Three weeks ago, 65% of the crop was classified "good to excellent". Now that is down to 48%.
"We are probably off the top on yields," says Anne Gutteridge from Cargills Paris office. "But the soya-bean is a resilient plant and we are still looking at a near record US crop."
The real uncertainty lies with the Canadian canola crop, which is almost due for cutting, and the Australian rape crop which comes off in December, says Ms Gutteridge. Both countries are looking at bigger output than last year – 8m tonnes and 2m tonnes, respectively.
As such, she believes the current price rally could be a sell opportunity for farmers. "Any one relying on frost damage in Canada or a drought in Australia to hold up prices is taking a gamble."
Kevin Bantik of Dalgety agrees. "The market is trading the sentiment of diminishing yield in the US, but it is far from bullish. Even in the UK we have a crop approaching 2m tonnes, up 300,000t on last year.
"And while farmer selling is slow, as they struggle to get the wheat in, crushers are well covered." *