Rising oilseed rape price signifies a good time to sell

Since the middle of January 2010, the MATIF market price for oilseed rape has been steadily increasing. And at €291 per tonne for May 2010, plus the effect of a weaker Sterling, now may be a good time for producers to sell their crops according to Owen Cligg, trading manager for United Oilseeds Marketing Ltd.

During the same period, the price of crude oil has also increased, and at more than $80 per barrel, many commodity traders have been encouraged to hedge funds against biodiesel. In direct contradiction, Chicago soya values have remained at a similar level to the values traded in the middle of January 2010. Meanwhile, the value of Sterling has continued to fall against the Euro, and has further added to the UK’s competitiveness in the commodity food market.

"All in all, we have seen significant firming in oilseed rape prices over the past couple of months," Mr Cligg explains. "Now is therefore a good time for many growers to think about forward selling their crops."

Mr Cligg also warns that a number of factors may cause the market to slump later in the year. "There is an oversupply of old crop oilseed rape within the UK that needs to be exported before this year’s harvest commences," he explains. "And the supply and demand of oilseed rape within the EU has been balanced by imports of up to 500,000 tonnes of Australian rapeseed.

"The large carryover of cereals in the UK and EU will put pressure on storage capacity at harvest time and this will be exacerbated by this season’s larger UK plantings of OSR, which are estimated to be up to 9% up on winter oilseed rape alone."

These increased plantings are predicted to result in a UK crop of more than two million tonnes. Larger EU plantings, estimated to be almost 5% up on last year, could also result in increased price pressure at harvest time.

"The premium for oilseed rape compared to cereal prices is at a recent high," Mr Cligg continues. "This could encourage producers to sell their crops and could also lead to increased plantings this springtime. If this trends continues, with growers increasing their plantings in the autumn, a bumper harvest next season could cause a significant oversupply of rapeseed which will in turn lead to reduced prices."