Jonathan Lane, trading manager at Gleadell’s, gives the latest analysis on the oilseed market.

Harvest in the UK is now complete and reports suggest that we have seen the best average field scale yields ever recorded.  Estimated national returns for the crop range from 3.6 to 3.8t/hct, which would suggest the crop will reach 2.5-2.8mln/t.  This compares to pre-harvest estimates of 2.3mln/t and a 2010/11 crop of 2mln/t.

This jump in UK production couldn’t have come at a better time for the UK farmer as the bumper yields have not been mirrored on the continent and, as a result, we are seeing excellent demand from the continental crushers.

The German Agriculture Ministry issued their official crop estimates last week at 3.9mln/t down sharply from last year, and the EU as a whole will be heavily reliant on third country imports to reach the reduced 22mln/t crush demand.

All of the fundamentals suggest that the European rapeseed market has the potential to go higher and we have already seen the market lift some £15-20 from the harvest lows. But, the macro-economic factors are playing an increasingly important role in the direction of the commodity markets and, as such, we can never fully trust in the fundamentals alone to drive the market.  Another stock market crash or some other global economic disaster could result in a sharp setback in prices so, with this in mind, caution should be the watch word particularly when we look forward to 2012 harvest prices.