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

The rapeseed market has been quiet this in week in terms of physical business. UK crushers are claiming to be covered in the spot positions, but we are seeing some export demand from the Continent as margins for processors improve in nearby positions. However the key feature for the UK market this week has been the recovery in sterling compared with the euro and US dollar.

Sterling had initially helped UK farm prices at the start of last week after falling sharply to six-month lows. This followed the announcement that UK inflation had slipped back into negative territory, potentially delaying interest rate hikes. However, this was quickly forgotten as UK employment data came in higher than expected, returning to the highest level since 2008. The pound rallied sharply as a result, up 3 cents in five trading days.

These moves in currency have a big effect on farmgate prices. Each cent change equates to £3/t so, despite the uplift on the MATIF futures, markets prices have actually fallen in sterling terms week on week. This highlights just how volatile today’s grain markets can be.