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

Talk of unseasonably wet weather in parts of Argentina and dryness in north eastern Brazil has been enough to spark a short covering rally in CBOT soybeans in the first week of trading, after what has been a quiet period over the festive break.

Some additional support is believed to have come from index fund re-balancing, who are generally “pro-ags”, and have been generally adding to long positions. The next real focus for the trade will be the monthly USDA report next Thursday.

In Europe, we are still dealing with the fall out of the poor rapeseed harvest, and we need to continue to attract imports.  Canadian seed continues to arrive for the bio-diesel industry, and Australian seed is on its way, but the balance sheet still points towards a need to either ration demand or pull in more imports.

The UK is also getting involved in the third-country imports. We understand a significant volume of Australian seed will land in Liverpool in early 2017, and this will largely correct the UK’s tight balance sheet.

With this in mind, we are going to need continued support from outside markets if UK farm-gate prices are going to be able to rally. Currency continues to have the biggest effect on our domestic prices with elections in Spain, Germany and France, and the uncertain political landscape in Italy.

Given this, it seems unlikely that sterling will return to its 2016 lows and any strengthening in the pound will be detrimental to prices. For those growers who held on to rapeseed since harvest and enjoyed a £60-70/t uplift in values, it might now be the time to sell.