Jonathan Lane, Gleadell’s trading director, comments on the OSR market

The UK rapeseed market continues to be dominated by the weakness in sterling.

The on-going uncertainty of the effects of Brexit, and the interpretation by some that Teresa May’s comments last week lean more towards a “hard” Brexit, caused the ‘flash crash’ in the early hours of last Friday morning, aided by some algorithm trading.

Sterling briefly plummeted to circa 1.075 vs the euro before recovering back to the 1.11 region, but the FX move alone has contributed to a near £10/t upward move in farm-gate prices in the past week, highlighting just how susceptible the UK rapeseed market is to currency volatility.

Away from the UK, the global oilseeds picture is struggling to find any fresh bearish news to undermine prices. Yesterday’s USDA report confirmed another huge soybean crop in the US, but global ending stocks are projected to fall compared to October 2015.

With lots of market chatter about the prospects for a supportive weather event in South America, it is difficult to see the market breaking lower at the moment.

In Canada the snow has started falling, with 20-30% of the canola crop still in the field. We were expecting to see a record crop from Canada this year, but with daytime temperatures for the next two weeks struggling to get much above freezing, we will see some crop losses. The situation needs to be watched closely.

New-crop rapeseed plantings across Europe are expected to be down, and there are parts of the UK where our crops don’t look great or don’t exist.

Whilst we have to accept that what happens with UK production is largely irrelevant to the global oilseeds market, and that currency has the potential to have a far greater effect, there is a general feeling of underlying fundamental support at the moment.