Chart of the week (12)

Prices of GMO-free oilseed meals on the rise

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Prices for GMO-free soybean and rapeseed meal have firmed significantly over the past few weeks. Rising demand has led to a shortage in supplies and sent prices rising. Asking prices for oilseed meals clearly reflect the difference in availability. Rapeseed meal on nearby positions is scarce and, as a consequence, expensive. Climbing demand for rapeseed meal for GMO-free dairy feeding has also contributed to pushing the situation further. GMO-free soybean meal is also in short supply at the moment and therefore expensive. As a consequence, its price trend is contrary to that of conventional soybean meal. GMO-free soybean meal containing 45 per cent crude protein rose EUR 8 per tonne to EUR 471 per tonne last month. Over the same period, rapeseed meal even surged EUR 9 per tonne, reaching EUR 225 per tonne ex works. Prices asked from livestock farmers were also raised. GMO-free soybean meal was increased 3 per cent whereas rapeseed meal went up 2.6 per cent. The distinct differences between rapeseed meal and GMO-free soybean meal are due to the differences in protein content and, consequently, feed value. However, the difference in feed value is mainly relevant for pig fattening farms, because meat formation primarily depends on protein content and quality in feed mixes. This does not apply to dairy cow feeding, as milk yield is not affected when replacing soybean meal by rapeseed meal. For more information, see UFOP's paper on the use of extracted rapeseed meal in dairy cow feeding - available in German only - at http://www.ufop.de/agrar-info/erzeuger-info/fuetterung/einsatz-von-rapsextraktionsschrot-in-der-milchkuhfuetterung.

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Chart of the week (11)

Ample supply weighs on soybean prices

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A bumper crop in South America has led to a strong increase in already ample global supply. Whereas consumption was only slightly up, supplies have grown significantly, putting downward pressure on soybean prices. In its March forecast, USDA raised its outlook for global soybean production in 2016/17 further. World output was estimated more than 4 million tonnes higher than the February forecast to 341 million tonnes, up just less than 9 per cent year-on-year. The rise is due almost exclusively to the expected 4 million tonne increase for Brazil. Consequently, the country would harvest around 108 million tonnes, just less than 22 million tonnes more than 2015/16. The estimates for Argentina and Paraguay remained unchanged at 55 million tonnes and 9.2 million tonnes respectively. However, market observers pointed out that production would likely be much larger than previously estimated, Agrarmarkt Informationsgesellschaft (AMI) reported. 2016/17 US production was seen unchanged at 117 million tonnes. Based on the bumper crops in the US and Brazil, expected global ending stocks were also raised to 82.8 million tonnes. This translates to an 8 per cent rise from 2015/16. Due to the even more abundant global supply, soybean futures prices came under substantial pressure, tumbling to the lowest level in nine weeks.

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Chart of the week (10)

Strong demand for biodiesel from Germany

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Export figures from the German Federal Statistical Office show a growing interest in biodiesel from Germany. Especially in the US, demand increased substantially. German biodiesel exports amounted to around 1.54 million tonnes in 2016. This translates to a 3.4 per cent rise year-on-year. Nevertheless, exports fell short of the 2014 record. EU member states continue to be the key recipients, absorbing around 87 per cent of German exports. The top recipients, the Netherlands and Poland, ordered significantly more biodiesel than a year earlier. French imports from Germany dropped 53 per cent, whereas Spain and Finland in particular purchased much more than 2015. According to figures published by the German Federal Statistical Office, the US was the most important third country, with imports reaching 85,000 tonnes. This was almost seven times the previous year's figure. At the same time, German imports of foreign biodiesel went up approximately 38 per cent to 718,000 tonnes. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), this was the largest quantity imported since 2012. More specifically, deliveries from the Netherlands rocketed 87 per cent to 248,000 tonnes. At 129,000 tonnes, imports from Malaysia of were at almost the same level as 2015.

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Chart of the week (09)

European 2017 rapeseed harvest estimated higher than previous year

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The 2017 rapeseed crop in the EU-28 will probably be 8 per cent higher than the previous year, due to lower than expected winterkill losses. Fears about insect infestations continue to generate uncertainty. Rapeseed crops look good across Europe. However, Strategie Grains reduced its forecast of the coming EU rapeseed crop by 0.5 million tonnes to 21.56 million tonnes. The main reason was indications of larger winterkill losses in Poland, which, however, have not yet been finally confirmed. Nevertheless, Poland is also expected to see an up to 21 per cent rise in rapeseed output compared to 2016. According to Agrarmarkt Informationsgesellschaft (AMI), any further major losses are not to be expected in the EU-28, with the result that the harvest estimate clearly exceeds the previous year's figure. In France, the rate of ploughing up rapeseed land following the winter will not be higher than usual. However, the around 7 per cent reduction in rapeseed area compared to 2016 will limit the crop potential considerably. German rapeseed production is put at 5.1 million tonnes, up 0.5 million tonnes from a year earlier. In the UK, the winter rapeseed area is reported to have fallen to a 13-year low. Initial forecasts estimate the 2017/18 area planted with rapeseed at 0.52 million hectares, while putting rapeseed output at 1.8 million tonnes.

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Chart of the week (08)

Tight global supply and demand balance indicates stable rapeseed prices

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World rapeseed supply will probably be even tighter in the 2016/17 marketing year than in previous years, producing significantly reduced ending stocks. The Union for the Promotion of Oil and Protein Plants e.V. (UFOP) expects producer prices of rapeseed to stabilise at the current level. USDA's current February crop forecast estimates 2016/17 rapeseed production only insignificantly higher than the January forecast. However, the agricultural experts anticipate a 0,3 per cent rise in projected processing in the current marketing year to 66.3 million tonnes. USDA also expects other uses to increase by just less than 4 per cent. Consequently, global consumption of 69.6 million tonnes will probably exceed global production of currently 67.9 million tonnes by 1.7 million tonnes. Ending stock estimates have been reduced further accordingly. The US authority currently projects 2016/17 ending stocks at only 5 million tonnes, down 5 per cent from a month ago. According to information published by Agrarmarkt Informationsgesellschaft (AMI), rapeseed prices in Paris responded promptly, breaking the key EUR 420 per tonne resistance in a lasting upward trend.

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Chart of the week (07)

Rapeseed enjoys competitive price edge over wheat

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The forward-contract price gap between wheat and rapeseed currently amounts to around EUR 220 per tonne, virtually reaching the seasonal high. The gap between forward-contract prices of soft wheat and rapeseed from the 2017 crop has increasingly widened in eastern Germany over the past several months. Whereas wheat prices declined, new-crop rapeseed went up. The main reason was the difference in global availability in 2016/17, which also affects the upcoming season. World 2016/17 wheat production is expected to hit a record at just under 750 million tonnes. By contrast, production of rapeseed will be insufficient to cover expected demand. This shortfall will come at the expense of stocks, which are forecast to decrease by more than 5 per cent. According to information published by Agrarmarkt Informationsgesellschaft (AMI), bids for new-crop soft wheat average EUR 150 per tonne ex farm, which is the same level as for spot produce because availability continues to be ample. The current tight supply of rapeseed also has an impact on the level of new-crop prices. The current asking price for rapeseed is at EUR 371 per tonne ex farm. This is EUR 34 per tonne less than for spot material on expectations of a more comfortable supply in 2017/18, but nevertheless up EUR 50 on the same time last year.

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Chart of the week (06)

Slump in vegetable oil prices

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Prices for vegetable oils fell from their high levels. Ample supply, decreasing demand and the firm euro rate sent asking prices on a slide. Scarce supply caused palm oil prices to rise by 18 per cent since October 2016. Over the past several months, soybean oil still benefited from uncertainty about the output volume of Argentinian soy. As weather conditions improved and with Brazil set to see a bumper crop, the high prices could not be maintained. Moreover, US President Trump's environmental policy makes the future use of soybean oil for biodiesel fuel production uncertain. Rapeseed oil, which had also picked up on firming asking prices for feedstock, also lost some ground. Agrarmarkt Informationsgesellschaft (AMI) reported that demand for vegetable oils waned appreciably over the past few weeks. Although the firm euro made imports to the euro area cheaper, buying interest was limited. Consequently, fundamental market factors have had a greater impact on vegetable oil prices than crude oil prices have. The WTI price has risen by more than 70 per cent since February 2016.

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Chart of the week (05)

EU-28 imports fall short of estimates

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The latest import figures for oilseeds and byproducts do not confirm the estimates for the running marketing year. Although the EU-28 2016 oilseed harvest and, consequently, supplies were down approximately 1 million tonnes, imports are developing contrary to what market experts predicted. Forecasts were for declining demand and, at the same time, climbing imports. However, this is not what we have seen happening in the market over the first seven months of 2016/17. In other words, at 9.1 million tonnes, imports of rapeseed and soybeans decreased by around 7.5 per cent year-on-year. With EU rapeseed and soybean processing curbed to just under an estimated 38 million tonnes in 2016/17 and the associated smaller supply of oils and meals, there are no signs of an increase in byproduct imports either. The 2016/17 forecast pegged soybean meal at 6 per cent and palm oil at just under 1 per cent above the previous year's figure. However, the current figures are 15 per cent and 18 per cent respectively below the year-ago level.

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Chart of the week (04)

Concerns boost soybean prices

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An unexpected lowering of the harvest forecast for US soy and continued concerns about rain damage in Argentina has caused the balance between supply and demand to narrow. According to the most recent 2016/17 USDA report, world soybean production is set to grow further, rising by just under 6 per cent from the previous year to around 338 million tonnes. Surprisingly, however, USDA lowered its 2016 US crop outlook by more than 1.4 million tonnes to 117.2 million tonnes. This adjustment will likely be offset by the 104 million tonne record estimate for Brazil, but global supply will probably exceed estimated demand by merely 5 million tonnes. Argentine weather conditions are currently giving rise to concerns. Agrarmarkt Informationsgesellschaft mbH (AMI) reports that over the past few weeks heavy rainfall once again caused flooding. USDA maintained the previous month's forecast of 57 million tonnes for Argentina. However, other sources pegged crop figures 3-7 million tonnes lower. Consequently, soybean prices climbed by virtually 3 per cent, temporarily reaching the highest level in six months.

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