Wednesday, 18 December 2019
- UK feed wheat futures (May-20) closed at £151.50/t yesterday, up £1.50/t from the previous day’s close. The lift was due in part to the weakening of the pound, which slid to £1=€1.18 yesterday, following the spike in value post-election (read more below).
- Argentina has announced a rise in taxes on both wheat and maize to 15%, up 3 percentage points. While seed is already bought at this stage, we may see farmers reduce investment in crops by decreasing input purchases, which could affect production.
When will EU rapeseed imports halt?
As at 16 December, the EU had imported 3.4Mt of rapeseed, 57% of estimated imports this season. However, with Ukrainian rapeseed exports likely to tail off in the near future, where remaining supplies will come from is uncertain. Ukraine is forecast to export 2.9Mt of rapeseed this season and the EU has already imported 93% of this figure (2.6Mt).
The EU has imported 0.7Mt of rapeseed from Canada so far this season. However, canola can be more difficult to find markets for the meal and glycerine after crushing. Imports from Australia could be scarce, with production currently estimated at just 2.1Mt by ABARES, down 35% from the five-year average.
With limited options, imports are likely to tail off as we move into warmer weather and biodiesel producers are able to switch away from rapeseed oil to alternative feedstocks.
In the short-term, the tightness in the market will continue to support prices. Nearby Paris rapeseed have risen €20.50/t since the start of October and closed yesterday at €406.50/t. In recent weeks a strengthening pound has capped domestic prices and prevented them from following the same pattern.
However, with the post-election pound strength now ebbing, domestic prices may see some benefit if this weakening continues.
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