There was lots of conflicting information in the oilseeds market in the past several days.
As this was being written Sept. 22, soybean prices were rising, adding to gains made the previous week.
Harvest reports from Iowa and Illinois, key soybean producing states, showed disappointing yields due to disease and August heat. Also, the American dollar was falling sharply, making it less costly to buy U.S. farm products.
China, the world’s biggest soybean buyer, was signalling it would resume buying American beans at a brisk pace. China had slowed trade recently with regulations regarding genetically modified soybeans, but most in the trade believed the real reason was to protect Chinese soybean farmers at harvest from a flood of imported soy.
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
Canola prices also rose, but not as much. That is partly because as the U.S. dollar fell, the Canadian dollar rose. The loonie climbed about one cent US from Sept. 15-22.
Also, canola’s premium over competing oils is wide, limiting the opportunity for canola to appreciate. But by Sept. 22, soy’s rise had narrowed that premium and allowed canola to climb.
Influential market newsletter Oil World said Sept. 19, that while harvest delivery pressure in the U.S. might cause some loss of recent gains in soybeans, the market should climb again by mid October because of the smaller than expected U.S. crop, good demand and no new supplies until the South Americans start harvesting in 2004. Oil World noted that soybean demand has outpaced production and ending stocks are shrinking.
But the recent runup in soybean prices has an agricultural analyst firm speculating that Brazilian farmers will increase production more than expected, pressuring prices in 2004.
Safras e Mercado said that with good weather, Brazil’s production could rise to 60 million tonnes, up from 51.2 million last year and the official new crop forecast of 57 million.
That would still be smaller than the 72 million tonne U.S. crop. But Brazil uses less of its crop domestically and Safras said if production does climb to the 60 million tonne level, its exports could surpass the U.S. for the first time.
Another supply issue on the horizon is expectation that palm oil production in Malaysia and Indonesia will increase in 2004, increasing competition and keeping a lid on oilseed prices in the new year.
