The shortage of soymeal in Argentina has pushed US and EU crushers to increase soybean processing to record levels, with soybean meal prices seeing a medium term peak at the beginning of May, said the UK based analysts.
The Argentine soybean crop is now pegged at around 34-37MMT, which is 20MMT down on the first US Department of Agriculture's estimate in May 2017. Soybean meal production is forecast to decline there from 33.3MMT in 2016/17 to 31.2MMT in 2017/18, with ending stocks dropping to just 2.5MMT.
Medium-term, an increase in US soybean planted area could weigh on the soybean complex, noted the oilseed and grain market specialists.
Additionally, the US-China tensions are diminishing. “Demand from the Asian ogre could well lead to a further rally in protein prices.”
Meanwhile, dry weather in Australia is supporting domestic canola prices into next season with the price spread to EU rapeseed narrowing significantly, said CRM Agri.
Oilseed prices data
- Hi Pro Soya Meal - Liverpool - £360-62/T Spot-July, £360/T Aug-Oct
- Rapeseed Meal - Erith - £215-20/T Spot-Jul, £195-200/T Aug-Oct
Source: CRM AgriCommodities client report dated 21 May 2018 [quotes are indicative only]
Less canola will be available next season to compete with EU rapeseed, as farmers reduce acres on dry planting conditions, they added.
Palm oil prices have found a floor and have rebounded from recent price declines over the course of 2018, reported CRM Agri. In turn, this development has supported vegetable oil prices and pushed rapeseed prices higher, said the team.
Grains outlook
The trade continues to gauge the damage in the key US winter wheat region of Kansas which was badly hit by dryness this spring, said the analysts. Despite improving ratings, the largest US winter wheat producing state is set to harvest its lowest crop in nearly three decades.
However, Chicago wheat futures slid today due to forecasts of rains in the US Southern Plains, according to Reuters.
Operators remain cautious in relation to wheat in Canada and Australia due to dryness, said CRM.
Uncertainty remains about production in the Black Sea region, but it is set to benefit from rainfall over the next week, said the commodity experts.
Egypt’s state grain buyer, GASC, did not purchase Russian wheat last week. Ukraine, instead, took the first place on the podium. Ukrainian wheat was more price competitive on a FOB basis than wheat of Russian and Romanian origin. However, the purchased volume of 60KT was the lowest since January 2017, said the analysts.
“Until more is known regarding the 2018 harvest in the Black Sea, wheat prices will remain volatile.”
EU conditions
French winter wheat was rated 78% 'GD/EX' as of the end of last week, which was in line with the five year average and better than the 75% rating at this time last year. “French farmers continue to talk about a promising crop with benign weather so far.”
According to the national association of farm cooperatives (DBV), Germany’s 2018 wheat production could fall 2% from a year ago to less than 24MMT due to a reduced planted area.
Looking at Romania, the analysts said that, following a cold winter, crops experienced mostly negative weather conditions at the end of the dormancy period including excessive moisture, a late spring and then hot temperatures with a lack of rainfall. “Since then, conditions have improved, although the southern part of the country could do with some more precipitation.”
Corn
The analysts said a good corn crop is needed this summer in both the US and Ukraine.
“Due to continued dryness in the southern part of Brazil and based on feedback from local farmers and operators, we remain dubious about the rather large USDA's 2017/18 Brazilian corn crop forecast of 87MMT.” CRM Agri said its estimate for Brazilian corn production is closer to 82MMT.