Willie Wright, Oilseed Trader at Gleadell grain merchants, gives the latest insight into the week’s events in the oilseed markets. The week has seen rises in rapeseed and soybean prices.  

Soybeans have rallied well over the past week, pushing through the $13 per bushel level. For the month as a whole, soybeans have rallied near 9%, demonstrating fundamental demand with the South American weather issues well behind us. We may see a small correction in soybeans but, for the time being, it feels like we have some upward momentum. 

Crude oil has held its recent gains with Brent sitting at $123.50 per barrel. Like soybeans, crude appears to be trending higher in the short term. 

Crush margins are still poor with little forward rapeseed business being done past 12th September. The buyers' interest remains in nearby positions and looks set to continue in this pattern as long as matif rapeseed futures prices remain inverted. Basis levels have slipped in Europe and the UK, with August FOB values now at a €13 discount to 12 August matif futures. 

Old crop rapeseed prices are at a nine-month high with prices trading circa £370 ex farm, export activity is strong even allowing for Sterling’s swings against the Euro. New crop rapeseed prices are tracking the rise in old crop and look set to continue this way. Ukraine’s weather problems, drought pre-Christmas and winterkill post-, will lower production by 500,000 tonnes, affecting supply throughout the European market and will make Europe’s reliance on UK rapeseed even greater. 

The announcement of drought conditions in parts of England by the government will make some sellers cautious of committing too much in forward sales – although there is nothing more likely to bring rain than the government calling drought conditions in February! 

Macro-economic activity - European banks have snapped up another €530bln of cheap three year loans, the first drawdown in December looks to have been successful so the market would expect continued confidence in the coming months. 

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