Jonathan Lane, trading manager at Gleadell, explains the latest developments in the oilseed markets.

The oilseeds markets over the last week have been trending higher, primarily in the nearby or November 11 crop positions.

The backslide in Matif rapeseed futures continues to favour nearby sellers with spot old crop generally trading at £370 ex-farm. Whilst this squeeze is suiting some, the inverted market position has almost shut off any business from January 12 onwards with most traders waiting until November 11 Matif futures come off the board.  The consequences of the November 11 squeeze and Sterling’s strong move against the Euro have eroded any premiums in the export market. In fact, in the UK, we are generally uncompetitive at these levels.

New crop oilseed prices have been rising too allowing £350 to be paid on the farm for July/Aug 12 as available. This has prompted some selling interest, but was short- lived as Sterling rallied against the Euro.

The market eagerly awaited the USDA monthly report on Monday 12th which appeared to disappoint and caused some traders to comment that is was too early to comment on the Soybean yield at this stage with crop development being two weeks behind average, and that they would rather wait for the October USDA report.

Global oilseed production for 2011/12 is projected at 453mln/t, up 1.5mln/t from last month.  Production increases for soybeans, rapeseed, sunflower seed, and cottonseed are only partly offset by lower peanut production.

Soybean production is forecast higher for the United States and India, where soybean production is raised 0.7mln/t to a record 10.5mln/t, due to higher planted area.

Canola production for Canada is increased 0.6mln/t to a record 13.2mln/t based on higher area and yield reported in the most recent report from Statistics Canada.