EU Rapeseed Futures Dive, So Why Isn't Meal Following Suit? Is It Really All Down To Oil?

With the rapeseed harvest well underway in France EU rapeseed futures prices have plummeted recently. The Nov future price has fallen from a recent high of EUR478 set on 16th June to EUR422 this morning.

Indeed, the Nov future closed EUR7.25 lower Friday and is currently down a further EUR10.25 today. That's EUR17.50 in a couple of days. It's somewhat surprising therefore that rapemeal prices today are only £1-2 lower than Friday morning.

Since June 16th seed prices have fallen EUR56/tonne, which is the equivalent of £44.50, yet UK crusher meal prices today are only around £10 lower during the same period.

Ah, its all down to the price of rapeoil the crushers would say.

Fair enough the price of rapeseed oil is substantially lower than 16th June. So lets do the calculations. I've used Liverpool prices just because the oil price there is more readily available to me. For what it's worth Liverpool rapemeal is actually down GBP 2 more than Erith since June 16th:

16th June: Nov rapeseed future EUR478, Nov rapeoil GBP858, Nov rapemeal GBP181.

Rapeseed at EUR478 = GBP382.50 (using a ballpark exchange rate of 0.80 euros/pound).

One tonne of rapeseed yields approx 40% oil and 55% meal and 5% "waste".

So on 16th June with Nov oil at GBP858 and meal at GBP181 we have a "theoretical" crush margin of GBP60.25 over the futures price (858x40/100 plus 181x55/100 minus 382.50).

At today's rates the sums are rapeseed=GBP337.50 (422x0.80). So the same margin over futures price has risen by more than GBP11/tonne (789x40/100 plus 170x55/100 minus 337.50) = GBP71.60.

If today's margin over futures price was still GBP60.25 then the price of November Liverpool rapemeal would be GBP150.45, nearly GBP20 LOWER than it actually is!

Yes I do fully realise that the physical price of seed delivered into Liverpool isn't the same as the Paris futures price, so please don't ring/email me to point that one out! What I am saying is that based on the decline in seed futures over the last month, and allowing for the decline in oil price, meal should be substantially lower than in fact it is. Discuss.