Jonathan Lane, Gleadell’s Trading Manager, comments on the OSR market

European rapeseed values have rallied this week on the back of the weaker euro and confirmation that cargoes of Australian rapeseed that were previously destined for Europe have now been bought by and switched to China. The European balance sheet was already pretty tight on paper and this reduction in imports has been the catalyst to the short covering that we have seen on the MATIF.

The question now though is what will happen with old crop crush demand. This jump in rapeseed prices combined with a drop in rape oil demand has put crush margins under pressure and it isn’t clear what capacity the processors will operate at this summer.

New crop prices are tracking old crop to an extent, but the real focus for next year has been on the unseasonably cold weather that we are currently experiencing across much of northern Europe. In Germany there are significant areas of land under snow and whilst there are no disasters yet, the crops should be growing away and they can’t when they are under 2ft of snow!

At 4pm today we will see the USDA report update their forecast for planting intentions and old crop stocks and this could be a game changer – watch this space!