News from foreign media on March 7:As of the week of March 5, 2021, the global oilseed market prices continued to rise. Bad weather in the main soybean producing areas in South America threatens yield potential. Canada’s rapeseed supply is extremely tight, spring planting is approaching in the United States, and competition for cultivated land is fierce. Soybeans need to attract farmers’ interest in planting to increase yield, replenish inventory, and meet growing demand. However, the recent outbreak of a new type of African swine fever in China has affected the demand for soybean meal and the loss of profits from soybean crushing has restricted China’s purchasing interest. US soybean export sales have significantly slowed down, coupled with the strong rise in the US dollar exchange rate, restricting the upside of the oilseed market.
On Friday, the Chicago Board of Trade (CBOT) May soybean futures rose approximately 25.75 cents from a week ago to close at 1,430 cents per bushel. The average spot price of US No. 1 soybeans was 15.07625 US dollars per cat, up by about 24 cents from a week ago. The Euronext exchange’s May 2021 rapeseed futures closed at about 518.50 euros/ton, an increase of 27 euros from a week ago. The intercontinental exchange (ICE) May rapeseed futures rose by 46.6 Canadian dollars from a week ago to close at 785.80 Canadian dollars/ton; the FOB spot price of soybeans in the Shanghe region of Argentina was 532 US dollars (including 33%export tax), down from a week ago 10 USD. The Shanghe spot price of Argentine soybean meal was US$441 per ton, down about US$14 from a week ago. The Dalian Commodity Exchange reported that soybeans closed at 6,285 yuan/ton in May 2021, an increase of 372 yuan from a week ago.
On Friday, the US dollar index closed at 91.99 points, up 1.2%from a week ago.
Rain in Brazil affects harvest and exports, and dry weather in Argentina
The market pays close attention to the weather in South America, especially Argentina. The Commodity Weather Group (CWG) predicted on Friday that in the next 10 days, 30%of the soybean acreage in Argentina may encounter dry weather, resulting in a serious loss of soybean yield. The Buenos Aires Grain Exchange said that if there is still no significant rainfall in the main producing areas in the next few weeks, the forecast for soybean production in Argentina may be lowered. The exchange currently estimates that Argentina’s soybean production is 46 million tons.
In Brazil, the rainy weather in the soybean producing areas continues to slow down the soybean harvest and damage the quality of the crop. Sylvano Felipeto, president of the Brazilian Agricultural Union, said that the impact of rainfall was great. It is not yet possible to know the extent of the damage, only when the harvester can enter the farmland. But the degree of loss should exceed 10%. The meteorological agency predicts that Brazil’s soybean producing areas will still be rainy for some time to come. As of February 25, Brazil’s soybean harvest has been completed by 25%, which is far behind the 40%in the same period of the previous year and the slowest harvest in the same period in the past 10 years.
China’s soybean imports slow down
The US Department of Agriculture’s weekly export sales report shows that for the week ending February 25, the US’s 2020/21 net soybean sales were 334,000 tons, which was 33%lower than the four-week average due to sales to unknown destinations 351,400 tons were cancelled. The net sales of soybeans in 2021/22 were 199,000 tons, almost all of which were sold to China. The total US soybean export sales in 2020/21 so far are 60.15 million tons, an increase of 76.8%year-on-year.
It’s worth mentioning that as of February 25, China has not purchased American Chen beans for three consecutive weeks. This is related to the Spring Festival holiday, but also because of the loss of domestic crushing net profits, which led to Chinese crushers after the Spring Festival. Still not interested in actively purchasing. The outbreak of a new type of African swine fever in some provinces in China has also affected the feed demand for soybean meal. The Ministry of Agriculture of China stated on March 6 that an outbreak of African swine fever has occurred in major pig-raising provinces such as Sichuan and Hubei. Earlier this week, a new swine fever epidemic broke out in Yunnan.
Most analysts believe that the current slowdown in soybean demand in China is a seasonal trend, and the number of live pigs after the Spring Festival has been greatly reduced, because a large number of live pigs are slaughtered before the holiday to meet the holiday demand.
Data released by the General Administration of Customs of China on Sunday showed that China’s soybean imports in the first two months of this year were slightly lower than the same period last year because of the delay in exports due to rain in Brazil. From January to February, China’s soybean imports reached 13.41 million tons, a decrease of 0.8%from 13.51 million tons in the same period last year.
Next week, the USDA may slightly lower global soybean ending stocks
On Tuesday, the USDA will release its March supply and demand monthly report. Analysts predict that this report may show that global soybean ending stocks for 2020/21 will be 3.037 billion bushels, slightly lower than last month’s forecast. The U.S. Department of Agriculture may lower its forecast for soybean production in Argentina. The current forecast is 48 million tons.