Gleadell Oilseed Trader Willie Wright gives an update on this week’s developments in the global oilseed market. Soybeans and oilseed are both trading well, though UK ex-farm prices have slipped slightly.

The soybean market is consolidating after what has been a strong bull move over the last three months, prices have moved from $11.25 to $14.50 and are currently trading at $14.15 - still at the top end of the trading range. Wider economic confidence has been knocked again which has prompted some recent profit taking. China’s demand for soybeans remains strong with better crush margins and rising demand for soybean meal. Exports to China are running higher than last year, with Argentina alone confirming exports to China of 26.8mln t from Sep 2011 to Feb 2012!

Crude oil continues to slip with prices now $7 off recent highs. There has been little recent fresh news in crude - although the spat between Spain and Argentina is not going to help certain aspects of the oil market.

Canola prices in Canada have slipped and look to have broken short term support levels at $6.18 basis May.

Like soybeans, canola has seen a large run up from its December low and some traders will be tempted to book profits at these levels.

Rapeseed prices are in spitting distance from the recent highs at €508.50/tonne and still look well supported. Unfortunately, UK ex farm prices have slipped due to Sterling’s strength against the Euro. UK export figures released this week showed 155,000 tonnes of rapeseed shipped for February, bringing UK rapeseed exports to 670,000 tonnes this season with four months still to run in the old crop campaign.

The new crop market has plenty of support with two independent analysts reporting a potential European rapeseed crop of 18.5mln t and 18.25mln t respectively. The bulls are winning their way in oilseeds and look set to continue for some time to come.

The sunflower seed crop looks set to increase to 39mln t globally, 5.3mln t higher than last year. This will go some way to help satisfy demand in the oilseeds sector, but will not have a major impact in the global supply shortfall of oilseeds for the coming year.

Macros are back and cannot be underestimated. Regardless of the strength in oilseeds, this aspect of the market could stop the oilseeds bulls in their tracks. We have already seen a gentle move to the sidelines by investors and it wouldn’t take much for the market to move to a risk off environment.