But the grain and oilseed market’s focus is shifting away from this season’s strong supply situation and looking to how new crop fundamentals will influence price trends, Jack Watts, lead analyst, cereals and oilseeds, AHDB Market Intelligence, told us.
He said last week’s global feed grains outlook from the US Department of Agriculture (USDA) “was fairly benign” with little change noted in the agency’s forecasting from earlier in the year. Watts said that was “typical for this time of year as the market awaits the release of the more critical planting intentions survey from the USDA on 31 March.”
“US soybean stockpiles are slightly lower than expected,” said Watts, “but, overall, the soybean supply and demand fundamentals are much less tight this January to March period compared to previous years. Everything is not hinging on South American supplies as would normally be the case at this juncture.”
Oilseed prices
Oilseed prices have started to move down earlier compared with previous years, said Amandeep Kaur Purewal, a senior analyst, also based at AHDB Market Intelligence.
Soybean prices wield a considerable influence on rapeseed values, as they dominate the global oilseed market, and the January to March period usually provides some support to oilseed prices, she said.
The lower prices seen this time round may be indicative of the market’s confidence in global supplies. “Although there have been weather concerns in Brazil and Argentina, which may have resulted in yield losses, a record crop is still on the cards,” she added.
Total export commitments for US soybeans have outstripped last season’s record pace, reaching 47.8Mt as at 5 March compared with 44.2Mt at the same point last year.
Infrastructural challenges
However, Kaur Purewal notes a potential threat in the next few months could be access to the South America crop.
In the past, poor logistics have caused problems in getting Brazilian soybeans to export markets and support to prices.
“Recently, blockades by disgruntled Brazilian truckers have provided some bullishness to the market, and although this situation has now eased, the risk of it reappearing remains. Additionally, it also remains to be seen if the current infrastructure will be able to cope with transporting a potential record crop to ports,” said the analyst.
The next focus of the market, following the South American harvest, will be US plantings for 2015/2016.
“Current indications appear to be bearish with projections suggesting that another large US soybean area is on the horizon. Even though initial forecasts are pointing to a lower European rapeseed area, this may be negated to some extent if soybean plantings remain high,” said Kaur Purewal.