April 19, 2011


UK heads for record rapeseed harvest


After a short period of unprecedented volatility, UK rapeseed growers are heading for a record crop next harvest, and not just by a small margin.


Assuming DEFRA's area forecast holds up, and the crops produce average yields, the nation's barns will be bulging with as much as 2.5 million tonnes of rapeseed, a massive 400,000 tonne more than was harvested in 2010. That would leave an exportable surplus of up to 500,000 tonne, double this season's level.


That might seem bad news for the market. But, even though the UK lays claim to being the third or fourth largest rapeseed producer in the EU after Germany, France and sometimes Poland, an increase even of that order will do little to address the shortfall in European production, which has pushed the market ever higher since last autumn.


"We've seen a huge increase in values recently, from GBP200/ tonne (US$325.11) ex-farm at harvest to GBP430 (US$698.99) at the end of the year," says Jonathan Lane, trading manager at Gleadell. "Europe had disappointing yields last harvest, producing a smidgen over 20 million tonnes, which meant it needed to import 2-3 million tonnes. Ukrainian production also slipped, and we had to turn to Australian imports to cover the last one million tonnes."


With the old crop market more or less done, values will probably track soy and crude oil markets until next harvest. There are unlikely to be any surprises, he adds. "The soyabean complex looks well supported, and I don't see crude oil prices falling any time soon."


As far as new crop is concerned, the tight feel looks set to continue, so the UK will have little trouble exporting its looming exportable surplus. "We may be heading for a massive crop, but it is going to be needed," says Lane.


"We will be one of the few in the EU to have a good production. Latest estimates put the 2011 European crop at around 20.8 million tonnes, a very small increase on last year. Very cold, dry weather in north and east Europe has not helped late-drilled crops."


At the same time European demand continues to increase, and this season's crush will be in the region of 22.5-23 million tonnes, 500,000 tonnes higher than 2010/11 due to increasing biodiesel use. Just five years ago, production was 16 million tonnes, producing a 300,000 tonnes surplus.


"The world needs to produce good crops everywhere to rebuild stocks. Europe has now become a net importer on an annual basis, while China's demand for oilseeds continues to grow rapidly."


However, into the third week of March snow was still preventing Canadian farmers from starting the spring drilling campaign and it remained bitterly cold. "They would usually expect to be planting by the end of the first week of April, but that looks unlikely. And the floods in Australia, another key producer, will do the crop no favours there either.

Video >

Follow Us