6 March 2019
The current bearish trend observed for UK wheat markets continued last week, despite mid-week positivity surrounding the earlier than anticipated reopening of the Ensus bioethanol plant.
The impact of Ensus reopening its bioethanol plant on wheat prices was relatively short-term. The primary feedstock of the plant is expected to be maize. After initial price rises of £1.65/t on the day, old crop (May-19) futures fell £4.40/t Friday-Friday to close at £162.25/t.
New crop (Nov-19) futures lowered £4.75/t in the same period. The discount from old crop wheat (May-19) into new crop (Nov-19) currently stands at £17.00/t.
UK delivered oilseed rape prices lost more ground again last week. Nearby rapeseed delivered into Erith was quoted at £313.50/t on Friday, £6.50/t lower week on week. Physical rapeseed is now £23.50/t lower than at the beginning of 2019.
The value of delivered rapeseed has dropped considerably, while domestic drivers for the price might be lacking, the drivers of the recent declines in Paris rapeseed futures are somewhat clearer.
The primary driver of the recent decline in old-crop rapeseed prices has been a drop in the price of vegetable oils. The benchmark price of crude rapeseed oil for export from the Netherlands (Spot, Dutch Ex-Mill FoB) fell $50/t from the end of January to the end of February. Its lowest level since May 2018. Similar drops have been seen for sunflower seed oil and soya oil.
The new-crop rapeseed outlook for 2019/20 remains tight both domestically and in the EU. The challenges posed by the poor establishment conditions on the continent and by CSFB domestically have served to reduce the size of the rapeseed crop in Western Europe. This reduction will likely support local prices. The support may be capped somewhat by expectations of larger rapeseed harvests in Canada and the Black Sea.