Jonathan Lane, trading manager at Gleadells reports on the latest developments in the oilseed market. The market appears to be floundering on wider economic woes.

We have seen the US soybean market fall by over US$100/mt since the September 2011 USDA report but, given that the report didn’t really change anything in terms of overall availability, the sharp setback in prices can be largely attributed to spill-over from disappointing corn numbers and uncertainty generated by the on-going macro-economic woes.

In Europe the situation is well documented. Greek debt versus the Franco-German bailout tag team. However, the Italian, Spanish and Irish debt is lurking in the background and the whole thing is a complete mess. Until the market accepts that Greece has neither the means nor, it would seem, the desire to pay back these bailouts the situation is not going to get any better. 

This muddle has largely overridden what is, on paper, a pretty bullish supply and demand outlook for European rapeseed. The investment money and speculators that have been involved in commodity markets have been heading for the exits and this has forced the agricultural-based commercial players to get out too and exaggerated the setback.

Eventually, market fundamentals should come to the fore and the bio-diesel demand that has created good crush margins ought to re-invigorate the market. But, for the time being, the crushers appear to be well covered pre-Christmas and, with the macros still looking very shaky, we are going to need something pretty major out of the USDA or some other as yet unforeseen circumstance to get this market out of the doldrums in this calendar year.