October 11, 2018

The recovering Sterling keeps a lid on rapeseed prices

Despite a staggering 12-session rally on matif rapeseed which propelled the Feb-19 Matif futures contract to a 2-month high in euro terms, our domestic values were only rising timidly due to a strong rally in the Sterling. According to Dow Jones news, the EU-UK divorce terms could be agreed as soon as next Monday whilst the UK economy could be set to post its best quarterly performance since the end of 2016. Following rising conflicts between Rome and Brussels, the pound posted its best 6-day winning streak (+1.8% as of yesterday) since early November 2017.
Although the rapeseed fundamentals are bullish long term to prices with ongoing drought in Australia, snow in parts of Canada and widespread issues for the 2019 harvest across Europe, the mammoth US soybean stocks resulting from a lack of exports to China will remain a high hurdle for the oilseeds complex if they are to sustain a recovery. For now, traders will wait until tonight’s USDA WASDE report which is expected to be bearish soybeans in order to position themselves. The US soybean harvest is making slow progress but with higher yields likely, the ongoing US-China trade war and clement planting conditions in South America, the outlook for soybeans continues to darken.