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

Monday’s USDA report increased the yield forecast for soybeans above trade expectation. The market reacted negatively, with prices down (at the time of writing) 20cents/bushel or £5.50/t.

The has had a similar knock-on effect on European rapeseed futures.

In the UK, the market continues to be dominated by short covering in the spot position as farmer retention continues to make it difficult for those with commitments to the crushers to find seed.

However, crushers seem pretty relaxed as UK prices have reached a point where Baltic imports have begun to calculate. One crusher will start taking delivery of imported rapeseed later this month.

With the problems that this season’s harvest has created for European rapeseed supplies, the price of seed relative to its products (oil and meal) has significantly eroded margins for the crushers. But, whilst production in the EU has suffered, we are expecting to see record canola crops in Canada and more than ample supplies in Australia.

Australian seed regularly trades into the EU, but this season it could even calculate into the UK for early in the New Year, something that hasn’t happened for a very long time.

So whilst the UK farmer is choosing not to sell, the UK crusher is finding adequate supplies from overseas. One of the key drivers for UK price direction continues to be currency and that remains a tricky call with on-going uncertainty created by the result of the EU referendum.

With the backdrop of relatively low grain prices and bumper crops of overseas, UK rapeseed prices well in excess of £300/t don’t look like a bad sell.