Jonathan Lane, trading manager at Gleadell Grain, offers analysis on this week’s movements in the global oilseed markets.

The November USDA report has been delivered with little overall change, US oilseed production has been reduced by 0.5mln/t, along with a small reduction in the yield forecast to 41.3 bushels per acre. This could have been construed as mildly friendly, but was offset by weaker export and crush demand. The market very quickly turned its focus back to the bigger issue of the Eurozone debt crisis. 

It would appear that the latest meeting in Cannes by the G20 failed to provide markets with the comfort they are looking for. Greece is still in disarray even with Papandreou stepping down, Berlusconi has suggested he might stand down which confused things more and spooked the EU debt markets further. This, in turn, pushed the cost of Italian debt to over 7% and, just to cap things off, LCH Clearnet has raised the initial margins on trading Italian debt. The lack of clarity makes trading the fundamentals of our markets that bit trickier, perhaps it’s time for the IMF to step in with some proposals as the ECB and Eurozone politicians appear to be out of their depth or out of control. Either way, a decision must be made soon. 

Oilseed market fundamentals generally remain positive with good underlying demand, although short-term crush margins look poor and European rapeseed prices possibly at the top end of their range for the time being. Crude oil has been trending higher recently, which has provided good underlying support to the market. 

Rapeseed prices have slipped over the last week, with the majority of the weakness coming from currency. New crop oilseed rape is looking tremendous and has enjoyed the warm spell of weather we’re currently seeing, perhaps even a little too advanced for this time of year.