News from April 18:As of the week of April 16, 2021, most of the global oilseed market prices have risen because spring planting in North America is about to start, but the planting conditions in the main oilseed producing areas are poor, including the weather in the Midwestern United States. The cold and dry conditions have intensified drought on the Canadian grasslands, which is worrying about the prospect of spring planting. In addition, the global vegetable oil market rebounded, international crude oil futures rose strongly, and the US soybean planting area may be lower than expected, which also supported oilseed prices. However, new soybeans from South America began to go on the market in batches, and the pace of US soybean export sales further slowed, restricting the increase in oilseed prices.
On Friday, the Chicago Board of Trade (CBOT) July soybean futures rose approximately 24.25 cents from a week ago, to close at 1422.50 cents per bushel. In the US Gulf, the average spot price of US No. 1 yellow soybeans was $14.9325 per bushel ($548.7 per ton), up 29.25 cents from a week ago. The Euronext exchange’s August 2021 rapeseed futures closed at about 479.50 euros/ton, an increase of 26 euros from a week ago. The intercontinental exchange (ICE) July rapeseed futures rose by about 31.10 Canadian dollars from a week ago to close at 769.90 Canadian dollars/ton; the FOB spot price of soybeans in the Shanghe region of Argentina was 524 US dollars (including 33%export tax), which was an increase from a week ago 13 dollars. The Shanghe spot price of Argentine soybean meal was US$420.41 per ton, down US$2.1 from a week ago. The Dalian Commodity Exchange reported 5,910 yuan/ton for soybeans in September 2021, an increase of 265 yuan from a week ago.
On Friday, the US dollar index closed at 91.54 points, down 0.7%from a week ago.
In the past week, the bulk commodity market including crude oil, base metals, agricultural products and soft commodities rose sharply. Crude oil rose more than 6%, copper rose 3.2%, sugar rose 7.5%, palm oil rose 4.6%; rapeseed It rose 4.2%, soybean oil rose 6.5%, soybeans rose 1.7%, and soft red winter wheat rose 2.3%, showing typical re-inflation trading characteristics. From a macro perspective, the strong economic growth of China and the United States and the high consumer price index indicate that the inflationary pressure that the market has been worried about is emerging. The Federal Reserve has repeatedly reiterated its low interest rate policy, which means that monetary easing will continue. The global green economy transformation and the green energy revolution have also injected new impetus into the fields of bioenergy and electrification. At the same time, there are more uncertainties in the supply of bulk commodities, which has triggered a lot of hot money into the bulk commodity market to do more, and bulk commodities are regarded as hard currencies to hedge against inflationary pressures and excessive currency. (The so-called re-inflation refers to the inflation caused by monetary oversupply under the fiscal easing policy).
As far as the soybean market is concerned, the focus of the market’s attention is the upcoming US spring planting season and the pace of South American soybean exports. In the Midwestern United States, farmers took the lead in planting corn crops, and soybean planting will begin later. Although the weather conditions have been good in the past week, weather forecasts indicate that cold and dry weather will occur in the central and western regions in the coming week, which will restrict farmers’ interest in planting and affect the emergence of newly sown seeds. In fact, at the end of March, the U.S. Department of Agriculture predicted that the soybean planting area in the United States this year would be 87.6 million acres, which is far lower than the 90 million acres predicted by analysts. This means that price increases are needed to attract farmers to a variety of soybeans, meet domestic and foreign demand, and avoid depletion of stocks.
The weather in the Canadian prairies is worrying. Since September 1, 2020, rainfall in most parts of the prairie has been about 85%lower than normal, especially in Manitoba and Saskatchewan. About 47%of the prairie is currently in an abnormally dry state. The driest area is the central and southern part of Manitoba, in extreme drought, possibly the worst drought in 20 years. Analysts pointed out that southern Manitoba and southern Saskatchewan have experienced at least six months of drought. This is not a good sign for farmers who plan to increase the acreage of rapeseed. Due to strong domestic and foreign demand, this year’s Canadian rapeseed ending stocks may fall to the lowest level in eight years, only 700,000 tons. The Canadian Department of Agriculture and Agri-Food (AAFC) currently expects the rapeseed planting area this spring to be 20.1 million acres, but considering recent price increases, analysts believe that the planting area will easily exceed 22 million acres. Statistics Canada will release the forecast data of rapeseed sown area in 2021 at the end of this month based on the results of the first survey.
With the launch of new South American soybeans in batches, US soybean export sales have slowed down seasonally. The US Department of Agriculture’s weekly export sales report shows that for the week ending April 8, 2021, the US’s 2020/21 soybean net sales were only 90,000 tons, 14%lower than the four-week average. The net sales volume in 2021/22 was 266,000 tons, of which 264,000 tons were sold to China. So far this year, the total US soybean export sales have reached 60,762,600 tons, an increase of 62.1%over the same period last year.
In Brazil, the pace of soybean exports was strong in April. The Brazilian National Association of Grain Exporters (ANEC) stated that Brazil’s soybean exports in April may reach 17.15 million tons, higher than the 16.3 million tons predicted a week ago. Brazil exported 14.9 million tons of soybeans in March. Brazil exported 14.28 million tons of soybeans in April last year.
The Buenos Aires Grain Exchange stated that the 2020/21 harvest of Argentine soybeans will be 7.2%, and the output is expected to be 43 million tons. The U.S. Department of Agriculture currently estimates that Argentina’s soybean production for 2020/21 is 47.5 million tons, the same as the March forecast; Brazil’s soybean production is expected to be 136 million tons, higher than the 134 million tons predicted last month.
China Customs data shows that China’s soybean imports increased significantly in the first quarter, reaching 21.18 million tons, a year-on-year increase of 19%. China’s soybean imports reached 7.77 million tons in March, an increase of 82%year-on-year because of the earlier delay of Brazilian soybean cargo clearance at Chinese ports.