Farmers are hanging onto their rapeseed in a market that’s coming up with prices they don’t like, against a background of uncertain currency movements as the pound falls against the euro amid pre-referendum uncertainty.
“The oilseeds market is being pushed around by currency,” John Thorpe, senior trader oilseeds at Openfield Agriculture, told Agritrade News. “The MATIF goes one way, and then is counteracted by currency, and vice versa - all that happens is that the market crabs sideways.”
“What we can say, is that there is four months yet before we will see any new crop,” he continued. “If we get back to a value of £260/tonne, that will prompt some farmer selling, but there really isn’t any at the moment.”
Buyers were holding back. “Crush margins are pretty poor by all accounts, so you can’t blame the crushers for not wanting to lock in negative or poor margins forwards,” Mr Thorpe explained. “They are buying hand to mouth. It adds up to an extremely quiet market. Britain is not the only country affected - it’s quiet across Europe,” he said.
There was some Australian seed going into continental Europe, but there were not the opportunities for the UK to export. “There is still stuff to do, but there is another four months to go,” he said.
Considering the wider situation, Mr Thorpe observed: “In the backdrop you have got a hangover of large global supplies of soybeans,” pointing out that pundits Oil World have talked about a three million tonne increase in stocks. “Argentina is crushing quite heavily at the moment so they will be producing competing oils and meals. Also at the moment it looks like the potential new crop production is going to be down.”
He also noted current new crop prices. “You are looking at ex-farm harvest values of between £245 -£250/tonne,” he said. “Will farmers sell at that level? Maybe not.”
In its Grain Market Report, out last week, the International Grains Council predicted a world soyabean crop in 2015/2016 broadly matching the previous year’s record 321 million tonnes. The reduced area is expected to lead to a 5% drop in world rapeseed production to 67.7 million tonnes, with the EU crop down by 11%.
The IGC also took a look at the 2016/2017 prospects for northern hemisphere rapeseed. “2016/17 winter rapeseed output in the EU is projected at 21.4 million tonnes,” it said. “The year-on-year fall of 2% almost entirely reflects a reduced planted area, with intentions limited by low prices at the time of fieldwork, as well as fears about the potential impact of a ban on the use of neonicotinoid insecticides.
“Crops in Germany and France, the leading producers, have benefited from mostly benign weather, with no major incidences of frost damage reported,” the IGC commented. “Elsewhere, a cold spell in Poland is expected to have resulted in some losses in early January, while fields in the UK have been hampered by wet conditions, potentially increasing disease risk.”