Chart of the week (20)
Oilseed meals increase in price
Prices for oilseed meals have soared over the past few weeks. The key driver was, first and foremost, the sharp rise in soybean prices. However, the sometimes tight supply also lent support to asking prices. Soybean meal is currently at its highest level since the end of July 2015. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), wholesale prices for 44% soybean meal most recently overshot the level of EUR 350 per tonne, while high-protein meal (48%) was in excess of EUR 380 per tonne. The sharp upturn in prices, which started early April 2016, was primarily driven by the surge in raw material prices in response to the poor Argentine soybean harvest. Currently, what is driving prices up is the slow pace of sowing in the US. Consequently, soybean meal is also getting increasingly expensive. Buyers now hope that the boom will wane. However, the prospects for another tightness in global supply with declining ending stocks are likely to maintain prices at high levels for the time being. Rapeseed meal most recently exceeded the EUR 225 per tonne mark. Tight nearby supply has sent prices rising to a level last seen seven months ago.
Chart of the week (19)
2016/17 global soybean demand exceeds output
The coming marketing year's demand for soybeans is set to outpace production by approximately 4 million tonnes. This is the outcome of the preliminary USDA estimate. Nevertheless, supply to the market will be more than sufficient, as ending stocks are expected to decline by 74 million tonnes to 68 million tonnes. According to this first official forecast, stocks would still be at the fourth highest level on record. The reason for the reduction in stocks is that consumption is projected to climb by around 10 million tonnes, to a historic high of just under 328 million tonnes. At the same time, production is estimated to rise by 8 million tonnes to 324 million tonnes. This is also the largest soybean output in history. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), the surge is first and foremost based on an increased forecast for Brazil and India compared to the previous year. China and India are the main driver in boosting demand, as they have been in recent years.
Chart of the week (18)
Low forecast of 2016 EU oilseed crop supports prices
Total 2016 oilseed production in the EU-28 could see a slight rise from the previous year. However, whereas an increase is expected in soybeans and sunflowers, the rapeseed harvest could dip further. This situation supports prices. The EU-28 member states are estimated to harvest 31.6 million tonnes of oilseeds in 2016, approximately 200,000 tonnes more than a year earlier. According to Agrarmarkt Informations-Gesellschaft (mbH), the rise is accounted for by a growth in sunflower and soybean output. In other words, the sunflower harvest is expected to increase by around 8.1 million tonnes (approximately 4 per cent) based on a slight expansion of sunflower area. Soy production could increase by 13 per cent, to a record peak of 2.3 million tonnes. By contrast, EU rapeseed production is expected to drop. The European oilseed associations Copa/Cogeca and Coceral peg the decline at an estimated 400,000 tonnes, to 21.2 million tonnes. The associations put the slide down to the slight reduction in rapeseed area. Yields by hectare could exceed the the long-term mean.
Chart of the week (17)
Farmers received more money for rapeseed only
Farm prices of rapeseed are currently the only prices that are above the previous year's level. Meanwhile, cereals and corn saw a sharp dip. Following a strong rise over the past several months, April 2016 rapeseed prices not only shot up to the highest level since the end of 2015, but even climbed above the year-ago level. Consequently, rapeseed is currently the winner among the field crops, Agrarmarkt Informations-Gesellschaft (mbH) reports, because for all types of cereals as well as corn, farmers are receiving less money than at the same time a year ago. As supply exceeded demand, the price drop was especially strong for soft wheat, amounting to virtually 20 per cent. In contrast, fodder oat and corn saw a moderate dip of just under 2 per cent. April 2016 bids for rapeseed were on average EUR 349 per tonne ex farm, up just over EUR 1 per tonne from the same month a year ago.
Chart of the week (16)
Fewer soybeans from Argentina?
The 2015/16 South American soybean production could be much smaller than has long been expected because of weather-induced losses in Argentina. In Brazil, harvest figures more or less match forecasts as the harvest is coming to a close. Several days of heavy rain in Argentina might result in harvest losses of up to 3 million tonnes, in addition to reducing soybean quality. USDA has recently put the 2015/16 Argentinian soybean production at 59 million tonnes, down approximately 2 million tonnes from 2014/15. Brazil is expected to produce a record crop of 100 million tonnes. Almost 90 per cent of its soybean area has been harvested. The Brazilian crop compares to the (narrow) US record of 107 million tonnes in the autumn of 2015, diminishing the gap between the two countries. According to Agrarmarkt Informations-Gesellschaft (mbH), preliminary estimates for the upcoming year 2016/17 indicate another large soybean output. In other words, as matters stand, the US soybean area for the 2016 harvest will fall just short of the previous year's record.
Chart of the week (15)
Palm oil takes break from climbing
Palm oil prices followed a downward trend, recently virtually plummeting to a one-month low. However, the tide could soon turn in the wake of continued buoyant interest in buying. Crude oil prices are soaring. Palm oil prices in Kuala Lumpur have registered heavy losses over the past few days. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), demand continued to be brisk. On the other hand, however, Malaysian production exceeded expectations. Instead of the expected losses caused by poor weather, Malaysia saw a rise in output by virtually 17 per cent to 1.2 million tonnes in March 2016, the Malaysian Palm Oil Board (MPOB) reported. Nevertheless, stocks slumped significantly as interest in buying continued to be strong. Since the annual replenishment of stocks in the run-up to the fasting month of Ramadan is set to start before long in Muslim countries, demand could continue to rally, sending prices back up again. Meanwhile, soybean oil in Chicago largely followed palm oil. Crude oil prices shot up massively to a five-month high as global supplies declined.
Chart of the week (14)
EU rapeseed area declined slightly
The area planted with winter rapeseed in the EU-28 for the 2016 harvest is estimated at 6.32 million hectares. This translates to an almost 120,000 ha drop from the previous year. Total output could decline slightly if yields will be average. The development of acreage devoted to rapeseed production differs widely in the various member states, Agrarmarkt Informations-Gesellschaft (mbH) reports. Whereas farmers in the most important rapeseed growing countries France and Germany expanded the area planted with rapeseed somewhat in the autumn, all other countries recorded significant reductions. In Poland, difficult sowing conditions and extensive losses due to winter kill account for the drop. In Great Britain, farmers already planned to reduce the area at the time of sowing. According to an assessment by the MARS (Monitoring Agricultural ResourceS) project of the EU Commission, crop areas are in a good condition in nearly all regions this spring. In some locations, the crops are in an advanced stage of growth due to the mild winter.
Chart of the week (13)
Rapeseed meal prices hit five-month high
Temporarily very keen interest in buying nearby material and firm feedstock prices in Paris have driven up prices of rapeseed meal substantially at the end of March 2016. Meanwhile, soybean meal prices remained at a fairly low level. Prices for rapeseed meal climbed to almost EUR 6.20 per protein percentage per tonne last week. Consequently, they not only hit a five-month high, but also reached the price level of soybean meal protein. Above all, the growing demand in the run-up to the holidays sent prices for nearby positions rising. However, most orders were only for minimal amounts. According to information published by Agrarmarkt Informations-Gesellschaft (mbH), the sharp rise in prices quickly curbed buyer interest. As a result, the high price level could not be maintained as there was no shortage of supply. However, as breaks in processing are imminent and a large oil mill is set to close down, chances are that supply could shrink appreciably before long.
Chart of the week (12)
Rapeseed recovers from its low
Early this year, the quotes for rapeseed in Paris registered heavy losses in the wake of weak crude oil prices and a stagnant market. Currently, an upward trend is looming on the horizon, driven by firm soybean and vegetable oil prices. Harvest delays in South America caused by poor weather and buoyant demand for US material have sent soybean profits leaping in Chicago in March 2016. The nearby surged by just over 7 per cent over the month, exceeding the mark of USD 9 per bushel (the equivalent of EUR 295 per tonne) for the first time since December 2015. Rapeseed in Paris also benefited from the upswing of soybean prices, hitting a six-week high in contracts for both the 2015 crop and the upcoming crop. Even a firm euro rate did not prevent the rise, Agrarmarkt Informations-Gesellschaft (mbH) reports. Rapeseed prices received additional stimulus from the fact that the competitive advantage of rapeseed oil increases as vegetable oil and crude oil prices are on a general rise.
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