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

USDA’s supply and demand report issued last Friday (9 May) painted a bearish picture for new crop US soybeans. Old crop soybean stocks were pretty tight (but this is nothing new), but the new crop production forecast is suggesting a record tonnage, up a further 0.75 mln t from the previous monthly USDA report.

The story on new crop rapeseed remains fundamentally bearish. This is due to small increases in production in the EU, good crops in the Ukraine, but most importantly massive old crop stocks in Canada (9mln t) and the expectation of another good crop to come, plus good soil moistures in Australia.

What is a constant though is EU’s farmer’s unwillingness to sell – both here in the UK and in France and Germany. Perhaps one could argue that if all farmers didn’t sell they could starve the market and in a normal year this might well be the case, but with Canada carrying 9mln t of stock (nearly 50% of the total EU crop) there is a very real alternative for the international rapeseed consumers

So in summary we remain worried about the price outlook for EU/UK prices for harvest. Everything we are currently seeing would suggest prices could move sharply lower and that logistics at harvest could be difficult. We have store deals/option deals available for farmers who don’t want to lock into today’s prices or alternatively plenty of priced homes for those would like to hedge at today’s values.