An acceleration in the pace of canola sowings in top exporter Canada, after a start delayed by cool and dry conditions, has also tempered production concerns, said the UK analysts.
However, while there is rain relief in the forecast, there remains a certain amount of market skepticism that Canada’s harvest will reach the six-year high of 20.3Mt forecast by the US Department of Agriculture (USDA). Indeed, Canada’s own farm ministry, AAFC, on Tuesday trimmed its forecast for domestic canola production this year to 18.4Mt, factoring in the slightly lower sowings figure indicated by an official survey. AAFC added that “a return to typical temperatures and normal to above-normal rainfall is required to support” the small rise in yield it expects.
Meanwhile, there is likely to be a reduction in Australian canola output for harvest 2023. Industry estimates from Western Australia, the top growing state, predicts an 18% fall in production, to 1.8M hectares in sowings.
Soybean prices
Looking to other oilseed markets, and soybean prices slip as US sowings continue apace, commented the CRM Agri team.
“The rapid pace of US soybean plantings has, in improving confidence of a bumper US harvest this year, encouraged the removal of some premium from prices. At 66% complete as of last Sunday, US sowings are running 14 points ahead of the average pace. Seedings are, signally, more than 80% finished in the top growing states of Illinois and Iowa, while catching up in northern states such as Minnesota and North Dakota, where initial wetness delays to fieldwork had raised some concerns of farmers being forced to curtail their planting plans.”
Meanwhile, an early-month recovery in Brazilian prices has foundered with the USDA’s upbeat estimates for world 2023/24 supplies, they said.
“Prices in the port of Paranagua have fallen back towards three-year lows, in dollar terms, after finding support from strong importer demand. Indeed, Brazil’s soybean exports in the first three week of May, at 9.7Mt, are up 37% year on year.
“Soybean meal prices, which offered so much support to soybeans earlier in the year, have also turned tail, with Chicago July-23 futures falling this week to a six-month low.”
In fact, it has been soybean oil, supported by the recovery in crude oil markets, which has done more to encourage this week’s more resilient performance in soybean futures, noted the grain and oilseed market experts.