It has been a less frenetic week on rapeseed markets than the previous fortnight, as the market adjusts to the news of the big wet in Canada and eases back off peak prices.

Local prices reached above AUD470 (US$392.1) per tonne port in the week ending June 18, sparking calls for sales from analysts such as ProFarmer, but have come back to AUD457 (US$381.2) per tonne port with Viterra this Tuesday (June 29).

This, however, represents a solid increase of around AUD35 (US$29.2) per tonne on early May prices.

Fox Commodities broker Peter Corbett said the market was now in a holding pattern until a clearer picture was established in Canada. "No one knows what the production is going to be like over there, it is still very much up in the air, and in the meantime, people are guessing whether it is getting better or worse," said Corbett, based in Wagga Wagga.

"In the next two or three weeks there will be a better idea of what is happening and the prices will react accordingly," he said.

He said the initial weather-based price spike created significant interest among Australian growers. "It has definitely sparked interest, we've seen growers engaging the market and writing new crop forward contracts right across the country, in all the port zones," Corbett said. "Probably most of the volume was done two weeks ago, it has eased off in the last couple of weeks as the price has come back."

Corbett also said the outlook was not necessarily positive for rapeseed prices, with both the soy and European rapeseed crops still in a good position.

"There is the potential for a drag effect from soy, and certainly a lot of people are wondering whether rapeseed is overpriced in relation to the oilseeds complex as a whole, as there is elastic demand for rapeseed oil, and users can often substitute with other oilseeds," he added.

Richard Koch, ProFarmer, said the rapeseed premium reached a high of AUD76 (US$63.4) per tonne over soy a fortnight ago, which is at the high end of the spread between the two crops, before the premium drifted back AUD15-20 (US$12.5-16.7) per tonne.

He said he believed that unless there was some bullish news on the soy front, it was unlikely that the rapeseed rally would be sustained throughout the season, and given the healthy state of the US soy crop at present, it appears the soy market will remain sluggish at best.

However, in the last ProFarmer newsletter, Koch raised the prospect of trade shorts in Europe, with European crops not quite living up to expectations, which will be supportive of solid rapeseed prices.

Corbett said the Australian crop, although early, was looking good right across the major production zones, particularly in New South Wales, where production estimates are markedly higher than in the previous few drought-impacted seasons, particularly in key rapeseed growing areas such as the Riverina and the Central West.