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

The market was surprised by the USDA Outlook Forum’s forecast of a near unchanged soy area. Most were expecting soy plantings to rise and corn to fall. Despite this, the USDA still predicts a higher US 2015/16 carryout on soy, doing nothing to undermine the bearish fundamentals.

In Europe the rapeseed market continues to track sideways, having been stuck in a narrow trading range on the MATIF for the past four weeks. Currency has had the biggest impact on UK farm gate prices, with sterling’s strength continuing to undermine values. While there has been some spot demand from shorts, there is little to suggest any fundamental reason for a rally in old crop European rapeseed prices.

Looking to new crop, farmer selling across Europe is slow. Plantings suggest that European production will show a small decline this year, but this is likely to be offset by lower crusher demand (poor rapeseed crush compared with soy processing margins) and higher old crop carryout.

Given the current outlook we need to see a weather or political event between now and harvest if UK rapeseed prices are to move significantly higher.