Jonathan Lane, Gleadell’s trading manager, summarises the week’s developments in the oilseed market.

The rapeseed market continues to trend higher over the past week even allowing for Chicago soybeans correction of 120 cents from their recent high of 1460 for Nov 2011.

Rapeseed once again was driven higher by the spot Matif Nov 11 contract which is still sitting at a €13.50 premium to Feb 11 – this inverted market continues to upset the market.

The domestic buyers maintain they are covered pre-Christmas, but the general feeling is that traders want to see how much of their November FOB commitments will be called on, or will they be rolled forward? The current price inversion is telling the market place it wants nearby supply but sellers are not coming forward, the Nov 11 contracts now sits at a €17 premium to the Feb 11!  Either way, this technical squeeze on the Nov 11 Matif futures market is stifling business with no carry for Jan 11 onwards. We will not know the outcome of this technical squeeze until the middle of October when the FOB declarations are made or not!

November soybeans have declined from their August 31 high of $14.65 into the lower portions of their trading range. Next support is the low end of the trading range at $12.82-$12.95. The ‘crop scare’ rally ended with the USDA’s September crop report and the lack of a damaging early freeze. The rally could be reignited on a bullish surprise (weather/yield) in the October crop report.

The crush margins for rapeseed have dropped slightly with Sunseed looking like the favourable option in the near term. China’s imports of soybeans in August were reported at 4.512mln/t, down 5.5% from a year earlier.