Supply concerns worry about strong global oilseed prices

In the week ending September 24, the increase in global oilseeds market prices was mainly due to the favourable fundamentals, including the dry weather in Brazilian soybean producing areas and the destructive frost fall in the Canadian rapeseed production areas, and the northeastern production areas in China. Frost also appeared, supporting the price of beans. In addition, the US dollar exchange rate weakened, the market is worried that the soybean arable land area will decline in the spring of next year, and it will also benefit the oilseeds market.

On Friday, the crude oil market of the New York Futures Exchange of the United States closed higher, mainly due to the strengthening of US stocks and weakening of the US dollar. At the close, the light crude oil contract for delivery in November rose by $1.31 to close at $76.49 per barrel. This is the highest level since September 14.

Analysts pointed out that Canadian rapeseed and Chinese soybeans may be cut down due to cold weather, while South American soybean sowing is delayed due to low soil moisture, which may lead to tight global oilseed supply and boost demand for US soybean exports. Some parts of Brazil are very dry, and sowing of soybeans will start next month. The reduction of soybean production in South America will further boost US soybean exports and help digest the record soybean production this year.

In addition, the strong demand for US soybean exports, especially from China, further boosted the price of beans. According to the U.S. Department of Agriculture, in the week ending Sept. 16, US soybean export sales amounted to 1.0837 million tons, of which China purchased 810,500 tons. The US Department of Agriculture also announced on Thursday that private exporters in the United States sold 120,000 tons of soybeans to unknown destinations and sold 120,000 tons of soybeans to China. This is the fourth consecutive day that US exporters sell soybeans to China.

In South America, recent rains in some soybean producing areas in Brazil have laid the foundation for the start of planting next month. However, as a whole, the weather in most soybean producing areas is still relatively dry, and heavy rain is urgently needed to supplement soil moisture.

Celress, a Brazilian agricultural consultancy, said that as of September 17th, Brazil’s Chendou and Xindou’s sales have both increased by one percentage point. Celeres said that for 2010/11 new beans, farmers sold 15% new beans, up from 14% a week ago and 14% a year earlier. Brazilian farmers usually pre-sell soybeans and purchase production materials such as seeds or fertilizers. Farmers in Mato Grosso, the number one producer, have pre-sold 22% of new beans, compared with 21% a week ago and the same period last year.

Mato Grosso farmers will start planting soybeans in mid-September. In 2009/10, Brazilian soybean production reached a record high of 68.5 million tons, compared with 57 million tons in the previous year.

According to other sources, the Belarusian government stated that the government's temporary implementation of the export bans on rapeseed, rapeseed oil and flaxseed was implemented from September 15, 2010 until March 15, 2011. The temporary ban was implemented because of the shortage of domestic rapeseed. This year's Belarusian rapeseed production was below the planned level due to bad weather, resulting in nearly 30% of rapeseed crops being rejected. According to government data, Belarusian rapeseed production is expected to reach 350,000 tons this year, compared to 621,400 tons last year.

According to Ukrainian analysis agency UkrAgroConsult, Ukraine's rapeseed production in 2010 is expected to be 1.45 million tons, which is lower than the earlier forecast of 1.5 million tons. In comparison, the output of Ukrainian rapeseed in the previous year was 1.85 million tons. The amount of domestic rapeseed used in Ukraine in 2010/11 is estimated at 39,000 tons, compared with an earlier forecast of 46,000 tons and 67,000 tons in the previous year. Exports are expected to be 1.42 million tons, compared with an earlier forecast of 1.46 million tons and the previous year was 1.79 million tons.

This week, Informa Economics, a private analyst firm, lowered its forecast for US soybean production this year. It is forecast that soybean production this year will be 3.412 billion bushels, compared with 3.437 billion bushels forecast at the beginning of the month. The initial harvest of soybeans was good. However, Informa lowered the soybean production data. The United States Department of Agriculture had forecast soybean production in early September at 3.483 billion bushels. Informa also released the 2010 planting forecast data. Expectations of corn production cuts triggered the recent surge in corn prices, and the market believes that soybean prices must rise before they can compete with corn for arable land. Informa expects US soybean planting area of ​​77.4 million acres in 2011.