Jonathan Lane, trading manager at Gleadell describes the latest events in the oilseed market.

The US soybean market broke out higher from its three-month 1300-1400c trading range last week, and this has been the catalyst to push the whole oilseeds complex higher in the last few days. Ongoing concerns regarding shrinking yield and lower production prospects have pushed prices up as the market tries to ration demand and stimulate increased planting in South America in order to make up the potential shortfall in the Global supply and demand picture. 

In Europe, the rapeseed balance sheet still looks tight even with 2-3mln/t of rapeseed crush capacity switching to sunflower seed.  However, even with this switch, the EU will need to import around 2mln/t of third country rapeseed.   At the moment, we look comparatively cheap versus other origins from Canada or Australia suggesting that we need to see prices go up further to attract the necessary imports. 

However, whilst the fundamentals of the market look supportive, we have to be wary about the Marco situation. We have seen in recent weeks how sudden falls in the stock market and worries about the global economic situation can affect our markets, and this has to temper any underlying bullish impedes.