Fields of gold offer yet more growth

Owen Cligg, trading manager at United Oilseeds, believes demand will continue to be strong the foreseeable future. Part of this belief is based on the increased levels of oilseeds now going into meeting renewable fuel targets set by governments. But there will also be rising demand from the food sector as Europe moves out of recession. Apart from the primary product of oil, Cligg expects a continuing strong demand for the residue after crushing – rapemeal – as animal feed manufacturers struggle to source soya and other feed products that are free from genetically modified crops. Oilseed rape production in Europe rose to 21.2 million tonnes last year. This is some 2.2 million tonnes above the 2008 level. Cligg predicts that it will take another 1.72 million tonnes above that level of production in 2010 to meet additional demand for crushing. Much of this will be for industrial usage, including fuel, which now dominates the oilseed market. Such demand has increased more than 400 per cent since 2001. The predicted growth of the market may even prove conservative. If the price of crude oil rises, then the value of renewable oil will follow the upward trend. Prices of the two commodities do not move entirely in tandem, but there is a linkage, demonstrated by the recent lift in demand for oilseed when the price of crude rose above $80 per barrel. Government targets for renewable fuel are driving up demand. This year, in Germany, all fuel companies are expected to make at least 6.2 per cent of their sales from renewable fuels. In the longer term many governments have set a 20 per cent figure for renewables. While wind and other physical power sources are expected to dominate this part of the market, fuel from the oilseed sector will also play a major role. Currently the spot price for oilseed is about £240 per tonne, but, with bonus systems operated by United Oilseeds based on oil content and moisture levels, that can increase by up to 10 per cent. Cligg says the price compares well with that of barley. For growers, the 2009 autumn crop was much easier to sow than that of the previous year. Scottish area manager for United Oilseeds Andrew Milne reckons that before most of the crop went under the recent snow he had never seen it looking better. Old hands will know that some crops left exposed to the elements may take a battering from pigeons as they see oilseed crops as an easy feeding option, but Milne reckons that losing some leaf is not a disaster as oilseed rape is a very resilient crop. While Scotland has no crushing facility of its own and therefore may be considered at a disadvantage to other parts of the UK, Cligg pointed out that last month United Oilseeds loaded a boat in Dundee with 3,000 tonnes of oilseeds heading for the European market. „Other boats are already booked,” he said.

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