German rapeseed sowings rise, beating price falls

German farmers lifted their hopes of regaining leadership among European Union rapeseed growers by increasing plantings by 9.1%, lured by "favourable weather conditions" and prices which remain elevated for now at least.

German growers, which have for the last two harvests fallen behind France in the EU oilseed ranks, sowed 1.42m hectares with the crop, oilseeds industry association Ufop said.

While a little lower than the 1.45m hectares of sowings forecast last week by Oil World, the area is ahead of last year's 1.30m hectares.

Farmers have been lured by prices which on the Paris futures exchange, Europe's benchmark, stood at E440.00 a tonne for November 2013 delivery, a high level by historical standards, and topped E470 a tonne during the late-summer sowing period.

Furthermore, growers enjoyed "good weather conditions for sowing" unlike in 2010 and 2011, when rains which delayed wheat harvests, and hurt grain quality, also hampered farmers' ability to sow rapeseed during its relatively early harvest window.

"Especially in the north, farmers have exploited the good seeding conditions in August and September, and have returned sowings to the high range of previous years," Ufop said.

Weather setbacks

The upbeat comments contrast with concerns that this time wet weather has hurt seedings in France and in particular the UK, the third-ranked rapeseed grower, where farmers have enjoyed strong crops in the last two seasons, fostering a jump above 1.0m tonnes in exports in 2011-12 to fill a void on the Continent.

In France, whose rapeseed yields have historically been a little lower than in Germany, sowings are set to ease to 1.55m hectares, from the record 1.6m hectares ahead of this year's harvest.

And in the UK, poor emergence rates and high levels of slug damage have added to the setback from a dismal autumn sowing period.

Market talk reported by FCStone's Dublin office has it that a poor winter on top of the weak start could see UK rapeseed production tumble by one-half.

Prices ease

Oil World pegged Europe's overall rapeseed sowings rising to 6.55m hectares, with growers in Bulgaria, Denmark, Hungary, Poland and Romania also lifting plantings.

However, the expectations come amid some concerns over the sustainability of rapeseed prices, given the reversals elsewhere in the oilseeds complex.

Soybean prices fell to a four-month low in Chicago on Monday, down 20% from September's record high, so crossing the threshold for the losses considered as meaning a bear market.

In Kuala Lumpur, palm oil prices fell on Monday to a three-year low.

Rapeseed, a more oil-heavy, rather than meal-heavy, oilseed than soybeans tends to be more attuned to palm oil values.

'Margins are still unexciting'

For crushers, the mix of low vegetable oil prices and relatively high prices of the rapeseed raw material, is pressing on crushers' margins

"Prices for rape oil remain under pressure, especially from palm oil", traders at a major European commodities house said.

"Even with relatively firm rape meal values, crush margins are still unexciting and not high enough to persuade crushers to buy forward."

At FCStone, Rory Deverell said that the strong demand for meal, as livestock farmers clamour protein sources in the absence of generous US soymeal export supplies, "is the only reason people are still crushing".

'In some trouble'

Nor, thanks to sector overcapacity, are biodiesel groups exploiting the lower prices of vegetable oils, their chief raw material, with Cargill last week revealing the shuttering of a site in Wittenberg, Germany.

"If the market is prompting a giant like Cargill to shutter capacity, you have to think the smaller groups are in some trouble," Mr Deverell told

Ufop said that more German growers had this year locked in high prices through signing contracts with buyers.

"The average contracted amount of rape is 174 tonnes for the 2013 harvest, above the level of the previous year by 149 tonnes," the association said.

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