March 27, 2013

 

Europe sees rise in rapeseed futures in 2013

 

 

Due to concerns of competition from China, rapeseed futures in Europe have risen in 2013, despite positive signs for the state of local crops.

 

Rapeseed futures for May delivery have risen 0.4% higher in Paris, reaching the contract's highest price for nearly four months, and setting course for what would be a sixth successive positive session.

 

The rise came despite further evidence concerning the positive state of German crop. According to the Deutsche Bauernverband (DBV) farmers' co-operative association, rapeseed and grain had "coped well with long-lasting winter".

 

So far, there had been no repeat of last year's "widespread frost damage", although lingering cold weather in Europe is causing concerns of delayed plantings of spring crops, among investors.

 

Last week, industry group, Coceral, forecast the German rapeseed harvest reaching 5.65 tonnes this year, a 12.2% rise on 2012's result which is sufficient to regain Germany's top rank among EU oilseed producers, overtaking France.

 

However, traders said that, despite the possibility of firm crops, attention was more focused on the squeeze on supplies due to China's decision to lift a ban on Australian rapeseed, imposed in 2009.

 

The cessation of the curbs has caused China to acquire 300,000 tonnes of Australian supplies.

 

The rapeseed, for delivery between April and June, was offered at about US$680 per tonne, below the US$716 per tonne quoted for supplies from Canada, historically the main source of Chinese imports, the China National Grain and Oils Information Centre said.

 

With China's rapeseed crushers running at less than 40% of capacity, competitively-priced supplies have proved to be popular with the country's processors.

 

For the EU, which sees a production shortfall in rapeseed, China's decision could mean paying more for supplies, traders said.

 

"Previously, Australian seed was banned due to plant disease and the Chinese bought mainly Canadian rapeseed which, of course is genetically modified and of little interest to EU consumers," a major European commodities house said.

 

"Now, EU importers will be competing with China for non-GM Australian supplies."

 

Grain merchant, Gleadell, said that the "UK export market" for rapeseed has picked up in recent days, "with cargoes trading from the UK into Europe", where major crushing plants are located.

 

The impact of China's decision has been reflected in rising prices of canola, the rapeseed variant. In Australia, cash supplies were being "well bid following the relaxation of Chinese import restrictions," said Luke Mathews of the Commonwealth Bank of Australia

 

"Immediate sales to China have been made in response to the friendlier trade rules, resulting in increased local values."

 

For May, Sydney's rarely-traded canola futures rose to about US$581.75 per tonne last week.

 

In Canada, canola futures for May rose 0.7% in value during early deals in Winnipeg on March 27, recovering from losses in the last session.