March 22, 2012 / 3:08 PM / 6 years ago

EU Rapeseed-Crush margins tight despite lower prices

* Rapeseed down 11 euros this week

* Tight supplies to weigh on prices until new crop arrives

* Strong export demand for UK rapeseed, Germany major market

AMSTERDAM, March 22 (Reuters) - Rapeseed prices in the European Union came off nine months-highs this week, but crushing margins remained low as tight supplies and high crude oil prices weighed on the market.

May rapeseed futures in Paris was down to 472.00 euros on Thursday after touching a peak of 483.25 euros a tonne on Friday, the highest for the front month since June 2011.

New crop contract August was at a support of 450.00 euros a tonne, down from 462.00 euros per tonne hit on Thursday last week.

“The price weakness is welcome but it does not change the fundamental situation much,” one German trader said.

“Paris prices have risen by about 70 euros a tonne since early December but rapeoil prices have hardly changed since the start of this year. It is a very tough time for crushers.”

Analysts and growers have released fresh warnings of serious damage to French winter crops due to frost early this year, particularly in the northeastern part of the country, and worries are now rising that the remaining plants could suffer if the current dry weather was to last.

French analyst firm Offre & Demande Agricole said in a weekly note this week’s price fall can be attributed to profit taking on soybean in Chicago and rainfall in U.S. north plains.

But the trend is not going to continue, it added.

“Prices are high and crushing margins too low,” one trader in the Netherlands said. “Tight supplies will continue to support prices until the new crop arrives.”

“Animal feed producers are replacing rapemeal with sunflower meal, as prices of rapemeal are too high,” another trader said.

In Great Britain, weak margins have curtailed demand for domestic crushers.

“There has been talk of a reverse crush,” one dealer said, referring to crushers reselling rapeseed and buying back rapeseed oil and rapeseed meal to take advantage of weak crush margins.


Dealers said export demand for UK rapeseed remained strong with Germany the main destination.

“I think we’ve had our biggest month in March and we’ve still got quite a lot to export into April and May. We’re having to do this because the crushers aren’t buying,” one UK oilseed trader said.

Dealers noted the UK rapeseed crop could exceed last year’s record 2.8 million tonnes, with planted area rising by around five to six percent, which could lead to harvest pressure with little incentive at the moment to put newly harvest rapeseed into storage.

UK rapeseed exports in the first half of the 2011/12 season, which started on July 1, 2011, exceeded 500,000 tonnes, up from less than 200,000 tonnes in the same period in the prior season, customs data showed.

Dealers said the UK remained on target to ship its exportable surplus of around 750,000 tonnes this season.

In Germany, traders noted additional spot demand for rapeseed this week.

“It seems that some ocean shipments with imports were delayed and with the import requirement so large after the poor crop, this generated extra internal demand,” one trader said.

Germany had in summer 2011 suffered a major rapeseed crop failure, with the rapeseed harvest falling some 31 percent on the year to 3.9 million tonnes.

But the outlook for the German 2012 crop remains favourable, with Germany’s farmers’ association saying on Wednesday it does not expect major crop damage from the cold snap in late January and early February.

Germany’s 2012 winter rapeseed crop will rise to 4.8 million tonnes, farm cooperatives forecast. (Reporting By Sybille De La Hamaide in Paris, Michael Hogan in Hamburg, Nigel Hunt in London and Ivana Sekularac in Amsterdam; editing by James Jukwey)

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