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Flaws on perfect crop picture halt rapeseed rout

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Rapeseed futures staged a late recovery, avoiding recording a four-year closing low as growing optimism over the European Union harvest was offset by some concerns over Canadian and Australian crops.

Paris rapeseed futures for August, which had threatened earlier to set its lowest close since July 2010, entered positive territory in late deals on Friday, ending 0.25 cents up at 337.75 a tonne.

The recovery came despite mounting expectations over the European Union harvest, the world's biggest, which is widely expected to beat by a margin the record 21.6m tonnes set five years ago.

'Pretty good results'

ODA, the French-based analysis group, earlier this week lifted its forecast for the EU harvest by 700,000 tonnes to 22.5m tonnes, including an upgrade of 150,000 tonnes to 5.35m tonnes in its estimate for the French crop.

On Friday, rival consultancy Agritel said that first cuts from the French harvest had shown "pretty good results", adding that the winter barley harvest was showing "pretty good yields".

"Nonetheless, there are big differences between the regions, with the eastern part of France being still very dry which could be a trouble in light soils," Agritel added.

In fact, the proportion of winter wheat rated "good" or "excellent" has risen three points week on week to 70%, overtaking the condition last year, data from the official FranceAgriMer bureau on Friday showed.

FranceAgriMer, which does not give rapeseed ratings, showed the French soft wheat crop steady at 69% good or excellent, one behind the year-ago figure.

'Farmer is undersold'

As an extra pressure on rapeseed values, producers have held back from pricing crop as the market has deteriorated, placing an overhang of unfulfilled selling pressure over futures.

"The European farmer is undersold coming into harvest and crops look good in almost all countries," said Jonathan Lane at UK grain merchant Gleadell.

"European traders are anticipating a wave of selling during harvest with farmers needing movement and cash."

In the UK itself, "farmers have sold a lower percentage of a bigger crop but many require movement and finance".

Virus outbreak

Nonetheless, after a "large downward move" in prices, "we now have a more cautious view on short-term price direction," Mr Lane said.

And some setbacks to crops of canola, the rapeseed variant, abroad have given some hope of selling pressure abating for now.

In Australia, a sizeable canola exporter, where the crop had been seen as making its "best start in a generation", an outbreak of beet western yellow virus has hit potentially 10,000 hectares of the oilseed in South Australia.

The outbreak of the virus, which can cause severe yield losses, is being put down to the growing resistance to insecticides of the peach aphid which carries it, and which has thrived amid a spell of warm and humid weather.

'Well over six inches of rain'

And in Canada, the top canola exporter, heavy rains are raising concerns of farmers being unable to complete planting plans, and inundating some of what was seeded.

Farm officials in Saskatchewan said overnight that 66% of oilseed crops in the province, Canada's top producer, were "behind" in their development, a factor which can red.

"Significant amounts of rain fell over much of the province this weekend with some south eastern and east central areas receiving well over six inches of rain in a few days," the officials said.

"Crops in the hardest hit areas have been significantly impacted by localised flooding and saturated field conditions."

'A relative outperformer'

The Saskatchewan farm office rated the province's canola crop 62% good or excellent, down from 73% a year ago.

At Citigroup, Sterling Smith said: "Cool and wet weather continues to hamper crop development and there has been some localised flooding reported.

"This can allow the canola to be a relative outperformer in the vegetable oil space."

However, as an extra pressure on prices on Friday, futures of palm oil lost 0.9% to close at 2,402 ringgit a tonne in Kuala Lumpur.

Rapeseed, as an oilseed heavy in oil rather than meal when processed, is particularly sensitive to the palm oil market.


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