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

Last night’s USDA report brought no big surprises, and the market took the report as being neutral to mildly bearish for the soy complex.

The key highlights of the report were USDA’s recognition of Argentina’s crop problems, with production trimmed from 57 to 55.5mln t. This is still not enough in many people’s opinion, and we wouldn’t be surprised to see additional declines in the March report. The Brazilian crop was left unchanged at 104mln t.

The US ending stocks were left unchanged at 11.4mln t, despite strong domestic crush and export demand.

The rapeseed market in Europe continues to find support and remains under-pinned by the need to pull in imports. However, the arrival of these cargoes into the UK is starting to affect prices.

One UK crusher has notified its suppliers that it will not take UK seed into its largest processing plant from mid-February to mid-March whilst they use Australian cargoes. The move has undermined domestic UK prices.

Looking forward to new crop, UK farm-gate prices have been pretty stable with the rally in the Matif being offset by the uplift in sterling. Given the expected jump in European production this year, and the relatively weak pound, we still believe growers should lock in a percentage of their 2017 production at today’s prices.