UK - Oilseed rape report

"Continuing weather problems in Argentina and strong buying demand from China has continued to underpin soy prices despite the US$ sharp rally in the last week," says Jonathan Lane, Gleadell oilseed rape trader.

"This has encouraged speculators and funds to continue to buy CBOT soy and this strength has spilled over into the European rapeseed markets.

"However, the fundamentals of the EU rapeseed market would suggest that this rally is unsustainable. The EU has already imported 2.2mln/t of rapeseed from the Ukraine and there is more to come. At least 750thd/t of Australian Canola is booked to arrive in Europe from mid-February onwards and yesterday the EU came one step closer to opening the door to T45 GM Canadian Canola. This new legislation will be approved shortly and around 150thd/t of Canola is expected.

"Despite the arrival of all these imports, the demand from the crush is actually falling. Rape oil stocks in Europe are at recent highs, tank space is at a premium as off-take from both the food and, more importantly, the fuel sector has fallen sharply. These burdensome stocks should ultimately catch up with the market and longer-term outlook continues to suggest lower prices," Mr Lane adds.