The South American supplier, the top meal-exporting country globally, saw a drought-reduced 2022/23 soybean harvest.
Market tightness “will continue through Q1,” until South America’s 2023/24 soybean harvests come onstream, said Greg Heckman, chief executive of Bunge, echoing comments from the head of rival trader, ADM, a week before, continued the analysts.
Meanwhile, the report shows that uncertainties over Brazil’s 2023/24 output have revived, thanks to dryness in the main, central growing belt, even as fears for Argentina’s have retreated with the onset of rains as typical of El Niño periods.
Seasonal pressure from the US harvest is weakening, with only 15% of the crop yet still standing in the field, as of Sunday, reads the outlook.
Crush margins
Soybean crush margins remain buoyant, noted the CRM Agri team, supporting demand for the oilseed. And they believe there is evidence of improved profitability in the European rapeseed crushing arena.
The weakening in rapeseed prices has fostered an autumn recovery in crushers’ margins even against soft rapeseed oil prices and local rapeseed meal prices, which have far underperformed those of Chicago soymeal, said the CRM Agri analysts.
“The dynamics are spurring an uptick in EU rapeseed imports, as we had expected, although, at 1.5Mt so far in 2023/24, imports remain 37% down year on year.”
EU rapeseed import targets are still way off the full season forecast of the US Department of Agriculture (USDA) of 5.2Mt, let alone the EU Commission’s 5.6Mt estimate, they cautioned.
“This is one reason to expect price support ahead, as the EU competes for imports later in the season, at a time of drought-curtailed Australian and Canadian export supplies. While the EU has, in Ukraine, a ready rapeseed origin on its doorstep, these imports alone will be insufficient to meet Europe’s needs."
Geopolitical tensions
How far Europe’s appetite extends will depend at least in part on the course of the crude oil rally, and Middle East tensions, remarked the CRM Agri team.
"The World Bank this week, while forecasting an average of $81 per barrel (Bbl) for Brent crude in 2024, said that prices could top $150/Bbl if the Israeli-Hamas war escalates into regional conflict.
“Such an outcome would have, substantial, upward implications for demand for biodiesel, and thence rapeseed which, while having largely ignored energy markets for the past two months, looks likely to take closer notice ahead.”
