Palm oil values have been leading a rally in oilseeds prices, with the futures market rising due to weather effects. The European rapeseed market looks set to be tight enough to keep prices firm through this year.
“The market is holding its own quite well,” David Whyte, trader at United Oilseeds, told Agritrade News. “It seems to be finding a bit of support on the back of palm oil.” He explained that the El Niño weather phenomenon had affected Indonesia and Malaysia, pushing palm oil futures in Kuala Lumpur to a two year high earlier this week. “We saw a bit of an advantage from that. We were up about 4½ euros/tonne yesterday,” he continued, speaking on Wednesday. “Obviously the value of sterling can stem the benefit to the farmer, but at the moment it has not been too bad. We are relatively weak, so it is helping to pass some benefit back down the line.”
Reports from the Black Sea region are also having a bullish effect. “It looks like the Ukraine is not going to have the exportable surplus that it would normally have,” Mr Whyte said. “Its oilseed production is going to be about 25% down, if you believe what is being reported.
“The Ukraine is normally a slightly weaker seller at harvest, with cargoes shipped to the EU mainly for biodiesel production.” he explained. “If that is the case, it won’t have so much to release into the market, which hopefully will prove supportive, if not for old crop, maybe for new crop prices.”
Mr Whyte also noted that Australian rapeseed crops are being drilled slightly early. “We don’t normally see their cargoes arriving until Christmas, or post Christmas,” he said. “The European market normally crushes about 25 million tonnes – with estimates that the EU is reportedly only going to be producing 21 - 21 ½ million tonnes in 2016. Therefore, if Ukraine oilseed isn’t available to fill too much of the gap, then there will be space for Australian crop, but it means that things could stay relatively tight through the trading year. Hopefully this will help prices firm and keep farmers positive about rapeseed.”
AHDB Cereals and Oilseeds also reported that palm oil had been bolstered by export figures. “Malaysian exports of palm oil in March 1st – 25th were around 13% higher than the same period in February according to cargo surveyors,” it said in its Market Report. “The strength comes despite concerns over output and rising prices and could be influenced by the introduction of a 5% duty on exports from April 1st, after 11 months of 0% duty.”
AHDB also suggested that big South American crops had limited gains in oilseeds. “Argentine soyabean output was pegged at 60.9 million tonnes by its government in the first official estimates of the season,” it reported. “This is above both the latest estimates from the Buenos Aires Grain Exchange of 58m tonnes and the USDA (58.5m tonnes). It cited the grain exchange as saying that harvesting had just begun in Argentina, with 1% cut by March 23rd.