Wednesday, 11 August 2021
- UK feed wheat futures (Nov-21) closed yesterday at £189.75/t, up £3.75/t from the previous close. Values traded in a £4.50 range throughout the day.
- UK futures followed the lead of both Paris milling wheat futures (Dec-21) and Chicago wheat futures (Dec-21), which gained €5.25/t and $5.24/t, respectively. Chicago wheat futures have since eased back down again this morning.
- Rain and cool temperatures in France have caused slow harvest progress and quality issues, supporting wheat prices.
- Strong Russian cash prices have also moved the market higher.
Delivered rapeseed prices reach historic highs this season
UK delivered oilseed rape (OSR) prices have reached historic highs in recent weeks. Delivered OSR, into Erith, was quoted at £458.50/t last Friday (06 August). This is the highest price in August since the survey began in 2005 (AHDB, delivered oilseeds survey). This is £119.00/t higher than the same point last year and £130.90/t higher than the 5-year average.
Why is the price so high and will it continue?
In recent years, small domestic crops have offered support to physical OSR prices. Despite a slight rise in current UK production estimates year-on-year, physical prices have started the 2021/22 marketing year strong. In recent history, the UK have been net importers of OSR. As such, our domestic crop size is only a small part in the puzzle. Our domestic prices generally track the Paris rapeseed futures, which are often influenced by the EU and global supply picture at this time of year.
This season has started with a relatively tight supply situation. European and Black Sea harvests have experienced delays. There is also no hiding from the situation in Canada, which has played a key role in rapeseed pricing throughout 2021.
EU imports of rapeseed have increased this season (from 01 July), to 414Kt (up 104Kt on the year), to help ease some of the harvest pressure. Usually, July imports would be dominated by Ukrainian supply. This year, supply has mostly come from Australia.
Canola imports from Australia are at a multi-year high. According to Oilworld.biz, Australian canola exports are due to decline through to September. Therefore, the EU will be looking to switch to Ukrainian supply in earnest. In July, rapeseed imports from the Ukraine were under half that of the previous year. Further, total Ukrainian rapeseed exports in July were the lowest since 2012 (Oilword.biz).
It is still unclear how big the losses have been to the Canadian crop, and this will remain a key watch point for UK prices.
Short-term, until Ukraine’s exports return to normal levels and Canadian crop losses are quantified, prices will likely remain supported. But the supply pressure could ease as harvest pace picks up in the Ukraine. After that, attention will turn to the Australian new crop picture.
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