The price of old and new crop canola and other oilseeds suffered last week as the trucker strike in Brazil weakened, allowing newly harvested soybeans to get to port.
The Brazilian government responded to some of the truckers’ concerns and agreed to talk about the high price of diesel. It also instructed the police to fine those blocking highways.
With that dispute out of the way, traders shifted their attentions back to the record size of the South American crops.
However, those crops might be a little smaller than expected.
Read Also
Canola used in only quarter of Canadian biofuel
Less than one-quarter of the biodiesel and renewable diesel used in Canada in 2024 was made from canola oil feedstock
Brazilian crop forecasts were already trimmed a little because of dry weather in January.
Rising forecasts for Argentina had offset the Brazil cuts, but now, some farming regions in Argentina have had the most rain in 50 years in recent weeks, resulting in flooding.
The excess moisture likely affected a million acres of soybeans. It was too early to tell what the damage would be, but future crop forecasts will likely be down a bit from the record 56 to 58 million tonnes of soybeans that were expected.
That modestly price-positive news for oilseeds was offset by reports from a palm oil conference in Malaysia that said palm prices could fall in the second half of the year.
Excess rain recently hurt production in Malaysia and Indonesia, but the support that provides for prices is negated by weak demand for the oil in biodiesel fuel and weak crude oil prices.
After plunging for months, the price of crude oil stabilized in February into a range between US$47 and $55 per barrel for West Texas Intermediate but was unable to rally significantly.
Early this week, investment bank Goldman Sachs said growing crude inventories could pressure WTI down to $40.
If it does, that would be another weight on oilseed prices.
Another more positive factor in the canola-rapeseed market is the ex-pectation that global production will fall for the first time in five years.
The International Grains Council has been drawing attention to significantly smaller European and Ukraine canola crops since last fall.
It restated that view late last month, forecasting that world rapeseed-canola production could fall to 68.9 million tonnes, down 3.8 percent on the year. That was mostly because of an almost 12 percent, or three million tonne, reduction in European Union production.
The IGC forecasts a 21.2 million tonne crop. The European Commission’s outlook is 21.1 million and Strategie Grains estimates 21.6 million.
The EU crop was seeded in the fall and, with prices weak, acreage is believed to be little changed from the previous year. However, yields are expected to be down because the EU ban on neonicotinoid insecticides could have left crops at risk of higher than normal insect damage.
The IGC expects a 17.6 percent drop in Ukraine production to 1.9 million tonnes because of troubles farmers had financing crop inputs.
The IGC used Agriculture Canada’s February forecast for a two percent increase in Canadian seeded acres and a three percent increase in production to 16 million tonnes.
We are in the rough position of producing this newspaper one day before the March 10 monthly U.S. Department of Agriculture supply and demand report, so I hope you followed the report coverage on our website.
