February Matif rapeseed has today reached 396.25 euros which is a contract high. However, with sterling also at over 1.18 euros it means that UK rapeseed prices are still in a range of £320 to £325/tonne in England and a £10 discount in Scotland.
Vegetable oil prices under the lead of palm oil are firm as demand for biodiesel remains robust and supply of many of the vegetable oils restricted. We believe stocks of vegetable oils will need to decrease so maintaining the bullish momentum of this market. Since rapeseed is 45% oil, the theory is rapeseed prices could continue to increase for now and that 400 euros on the February Matif is a distinct possibility.
Soya bean prices have also been increasing, but their upside may be limited as there seems to be little threat from weather to the South American crops. Also, Chinese demand continues to be limited as African Swine Fever has reduced the size of the Chinese pig herd.
Matif rapeseed prices for August at 376.50 euros are still at an inverse to this year which, with planting problems throughout Europe, suggests that this market should have a potential upside. Sterling prices are in a range of £300 to £310 ex farm for harvest.
Regards,
Owen
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