Jonathan Lane, trading manager at Gleadell, recounts the latest developments in the oilseed market.

The greatly anticipated USDA October report has been delivered, and for Soybeans this was without much fanfare. US yield came in at 41.5 bushels per acre, 0.3 lower than the previous report, and production reduced slightly by 25mln bushels with ending stocks higher than expected at 215mln bushels. Global Oilseed production now stands at 453.5mln/t with end stocks of 73 tonnes. Having seen Soybeans fall $3 since the September report and the large reduction in spec/fund longs it wasn’t too much of a surprise to see the sharp rally on Tuesday prior to the report. Lower prices have prompted some bargain hunters to come back to the market, including China who bought 700,000 tonnes of Soybeans this week.

European rapeseed prices have been neutral to slightly higher over the past week although we are still trading a largely inverted market with the inversion now spilling from November into February. Once again, we have seen macroeconomic activity calm down for the time being although, until we have a clear path from the ECB/IMF etc, we will still have underlying uncertainty. There are mild production concerns for 2012 OSR crop regarding reduced planting areas in Germany, Denmark, Romania and Bulgaria - this is mainly down to weather. In the UK, Defra have released their latest stats showing record UK Oilseed production at 2,76mln/t up 25% with an average yield of 3.8 tonnes per hectare. With OSR prices looking attractive for the coming year and demand remaining high we expect to see a continued increase in production.

With October USDA figure behind us and a large amount of investor money out of the market, fundamentals will give the market direction going forward and there is no getting away from the strong demand for oilseed rape going forward. From a chart or technical point, oilseed rape looks to be at the top of its price range, although a breakthrough here to the upside could give the market some nearby strength. Talk of higher prices should be tempered by the continued uncertainty in macro events for the time being.