Willie Wright, Oilseed Trader at Gleadell grain, provides analysis on the week’s developments in the oilseed market. Fresh weather issues in South America have affected oilseed markets most prominently this week.

Soybean news has been mixed over the last week, with continued weather issues knocking the Argentinian crop down to circa 40mln t and Europe’s continuing economic woes weighing on the wider market place. Poor crush margins have prompted the Chinese to cancel, defer or resell soybean cargoes which is adding further pressure to the bulls in a technically weakening market in the short term.

Crude oil prices have been trending lower since they touched $125 per barrel in March, with the economy under the cosh currently and more elections from Greece in June, crude prices could slip to nearer $90 per barrel in the near term.

Old crop rapeseed prices are around £30 off their recent highs with the strong longs not wanting to chuck the towel in yet. There is good buying interest from the continent, but reluctance from traders to chase prices higher in a thin market. New crop rapeseed prices are back to circa £350 ex farm depending on location and, with the current uncertainty in the general market place, we still regard this as a good level to trade.

Crush margins for European rapeseed are poor, and it would appear this is now affecting the Chinese who would rather sell back their cheap soybean or rapeseed purchases at a profit than run their crush at a loss!

Macro-economic factors are applying more pressure to commodities than fundamentals at this time, with Germany adopting a strong stance against the weaker southern European countries; volatility looks set to run through the summer months.