Oilseed prices were rising early this week, despite a United States Department of Agriculture report Nov. 9 that increased the estimate of American soybean production.
Traders shrugged off the report for several reasons.
First, they’d already factored an increase into the market days before the report’s release.
Second, market sentiment is turning toward demand and away from supply as the American soybean harvest winds up.
China’s entry to the World Trade Organization, confirmed on the weekend, is expected to lead to that country importing more soybeans and soy oil. Also, American soybean cargoes appeared to be encountering no problems meeting Beijing’s new import requirements for genetically modified crops.
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China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
Another positive factor was the palm oil market.
Exports of Malaysian palm oil for October were 38 percent higher than the month before. Early November exports were even stronger.
That drove up palm futures prices on the Malaysia Derivatives Exchange, where traders expect the higher price will generate more buying by India, Pakistan and China on fears that the market could go even higher.
The enthusiasm rubbed off on Chicago soy oil prices.
The Winnipeg canola market was closed Nov. 12 for the Remembrance Day holiday, but generally canola, with its high oil content, closely traces soybean oil prices.
Another positive development for canola was domestic demand as evidenced by the weekly crush number.
Although the smaller crop has meant the canola crush is running about 78 percent of last year’s pace, last week’s crush topped 60,000 tonnes, up 16 percent from the week before and the highest since the spring of 2000.
Traders also disregarded the USDA estimate of American corn production, which was a little higher than what traders expected.
It appears that the strength in soybeans Nov. 9 spilled over into the corn pit, edging corn prices up just enough to trip buy stops set by major investment funds. Buy stops are price points derived by a technical analysis of a market’s trends. When the market hits them, buy orders are automatically triggered.
The USDA’s report on wheat was also generally negative but prices held on thanks to the strength in corn and soybeans. Also, the market was underpinned by rain that continued to dog Argentina’s wheat crop.
