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Hopes of better transport mandates could aid oilseed demand

The NFU hopes an upcoming consultation on transport biofuels will raise demand for crops


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An increase in the use of crops for transport fuel could provide greater demand to the oilseeds sector.

 

Speaking to Farmers Guardian, NFU chief arable adviser Guy Gagen said a consultation set to take place on the UK’s biofuels obligation may include requirements for a greater amount of fuel coming from crops.

 

"Very shortly there will be a consultation released from the Department for Transport about how to meet [renewable fuel] requirements" Mr Gagen claimed.

 

He said 1.5 per cent of transport fuel in the UK was currently made up of crop biofuels.

 

"We think 7 per cent should be coming from crops, not 1.5 per cent," he said.

 

The subject was discussed at the combinable crops breakout session at NFU’s annual conference in Birmingham last week.

 

Andrew Hill, grain origination team leader at Frontier Agriculture, said oilseed prices were currently in a narrow range and global production numbers were increasing. He claimed prices did not look like they would improve in the short-term.

 

He said: "Demand is okay but the oil markets are depressed. The market is very static.

 

"Production numbers seem to be increasing. Slowdown in the growth of the Chinese economy makes it more difficult because they import close to 60 per cent of the world’s soybeans."

 

On Tuesday afternoon, Paris rapeseed prices were €348.25/tonne (£271.22/t) and Mr Hill said UK ex-farm prices had traded within a range of £2.50-2.60/t for the past three months.

 

Wheat prices have also continued to fall since the new year with high production in the UK and globally. May 16 LIFFE wheat futures closed on Monday at £103.80/t, back about £13/t so far in 2016.

 

Mr Gagen said better prices for those selling further forward meant people were carrying a proportion of their sales.

 

"If farmers have not sold already they are probably using their assets and trying to get a higher return for their grain," he said.


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