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

USDA released its latest supply and demand update last night. This July publication has traditionally been viewed as a key report for the market, as the market looks for its first proper steer on production following the completion of corn and soybean planting. It provided a few surprises.  

Despite declines in the US weekly crop ratings in the last two weeks, USDA chose to leave its soybean yield estimate unchanged when the market was looking for a confirmation of the impact of the recent dryness on the crop.  

The reality maybe significantly different unless the crop receives significant rain and cooler temperatures. For now though, the market is viewing the report as bearish and has fallen some £7-9/t since yesterday. Price direction over the next two weeks is all about US weather.

In Europe, rapeseed futures have been following the sentiment of the soy complex. Prices have hit three-year highs, despite talk of the French crop being up 0.5mln t, and early cuts in Germany and the UK also showing some positive early results.

Significant swings in sterling/euro continue to add an extra level of complexity to an already volatile market. However, the UK farmer has seen a sharp upward move in UK farmgate prices.

Given the levels of uncertainty about the US production, these higher values represent an excellent hedging opportunity, particularly for those who are looking for harvest movement.