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Stackyard News Sep 07

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    Biofuel Demand Maintains Oilseed Rape Market

Global influences underpinned by demand for biofuel are set to maintain a firm oilseed rape market well into the foreseeable future, according to United Oilseeds’ northern area manager, Graeme Leslie.

oilseed rape

“Oilseed rape is trading at £218/t plus oil bonuses, for May 2008 delivery, a figure that is destined to compete with feed wheat for the same period,” he explains.

“Furthermore, growers are not only operating in a favourable marketplace, they also have improved genetics and management to hand in order to push yields far beyond the current 3t/ha UK average and exploit the crop’s true potential.

“For example, at Crossfell House Farm, Kirkby Thore, near Penrith, NK Grace has just come off the field at 5.56t/ha, while further north at Hadden Farm, Kelso, Ian Fullarton reports the same variety yielding 5.1t/ha.

“Take that 5t/ha yield worth more than £230/t including oil bonuses and returns will be well over the £1,100/ha mark,” says Mr Leslie.

The backdrop to the marketplace is Europe’s 10% target for the Renewable Transport Fuels Obligation (RTFO) by 2020, and which the European Commission anticipates lifting oilseed prices by up to 18% in the medium to long term. Added to that is the expanding world demand for vegetable oils.

Combined with this year’s supply shortage with the European 2007 oilseed rape harvest estimated down by 25% to 15m tonnes, said Mr Leslie.

“Reports across Europe suggest that the weather – the spring drought followed by floods has taken its toll on oilseed rape. In addition, the RTFO is placing priority on the crop for fuel over food usage, while mineral oil has escalated from $65/barrel to $72/barrel in the last three months.”

He adds: “Growers however should not be complacent when it comes to future trading; simply awaiting for the newly drilled crop to emerge before making marketing decisions maybe too late. If they want to take full advantage of the current future market and reduce risk, then they should consider selling a percentage of next year’s crop now at a fixed price, or else commit the crop to a pool which trades on the acreage planted.”

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