World Grain - September 2014 - 22

GRAINMARKET REVIEW

Oilseeds
by Chris Lyddon

Argentina up river

650
600
550
500
450
400
Jun-2014

Mar-2014

Dec-2013

Sep-2013

Jun32013

Mar-2013

Dec-2012

Sep-2012

Jun-2012

Mar-2012

Dec-2011

Sep-2011

Jun-2011

Brazil Paranagua

750

Mar-2011

Big rapeseed crops around the world are adding to the bearish tone
of the world's oilseeds markets and look set to change trade flows by
reducing demand for imported seed in some of the biggest importers.
The International Grains Council (IGC) set the scene in its Grain Market Report at the end of July. "The IGC GOI soybeans sub-Index posted
a net decline of 7% over the past month," it said. "While prospects for
a bumper U.S. crop were bearish, the steep fall was also technical in
nature - reflecting the switch from old to new crop U.S. export values."
New crop (November) U.S. soybean futures recorded especially
sharp losses, of 12%, during July, it said. "USDA's acreage report
placed forecast plantings well above expectations and underpinned a
heavily bearish tone at the start of the month," it said. "Futures subsequently declined further as near-perfect Midwest weather boosted
yield prospects, although concerns about dryness stemmed overall
falls more recently, as did fresh export interest from China."
As of July 30, Gulf export quotations stood at $477 fob, compared
with old crop values of $555 fob at the time of the last GMR, it said.
"With supplies in Brazil dwindling and reflecting firmer export premiums, values fell by only 3%, to $515 fob (Paranagua), while Up
River quotations in Argentina declined by $17, to $494 fob," it said.
The IGC also reported that ICE (Winnipeg) canola in Canada futures
eased by around 6% "as support from adverse weather was outweighed
by pressure from weaker U.S. soybean and E.U. rapeseed markets."
Expectations of a record E.U. crop pushed E.U. rapeseed futures
down by 10% on the month. "However, after initially dropping to
contract lows, losses were partly reversed more recently, as persistent heavy rains in key growing regions sparked fresh crop worries,
including about a potential downgrading of quality," the IGC said.
In its World Agricultural Supply and Demand Estimates report
for August, the USDA put global oilseed production for 2014-15 at
521.8 million tonnes, slightly below its figure for last month. Its estimate for the previous year's production is 503.9 million tonnes.
"Gains for rapeseed and cottonseed are more than offset by reductions for soybeans, sunflowerseed, and peanuts," it said. "Higher
soybean production in the United States is offset by a reduction in India where the delayed monsoon results in lower planted area. Rapeseed production is raised for China, the E.U., and Ukraine.
"These gains are partly offset by a smaller crop projected for Canada with lower area resulting from flooding in parts of Saskatchewan
and Manitoba. Other changes include lower sunflowerseed production for Russia, reduced peanut production for China, and increased
cottonseed production for India."
The USDA's Economic Research Service reported a bumper E.U.
crop in its Oil Crops Outlook report. "E.U. crop yields are very good
and USDA raised its production forecast this month by 250,000 tonnes
to 22.65 million tonnes," it said. "A better yield outlook for France, Romania, and Bulgaria is primarily responsible for this month's increase.
"Higher domestic rapeseed supplies could trim E.U. imports in
2014-15 to 2.8 million tonnes from 3.45 million in 2013-14. Limited
prospects for growth in the E.U. rapeseed crush are also likely to
cause season-ending stocks to accumulate."
Ukraine's rapeseed crop for 2014-15 is also expected to be very

U.S. Gulf

750
FOB ($/million tonnes)

Bumper crops weigh on market

Soybean export prices

Source: U.S. Department of Agriculture

good. "Despite a 15% decline in Ukraine rapeseed area this year,
excellent yields are seen boosting production by 200,000 tonnes this
month to 2.2 million," the ERS said. "The fall-sown crop emerged
largely unscathed from harsh winter weather while spring moisture
conditions were favorable for reproductive development.
"Despite a smaller crop than last year, Ukraine rapeseed exports
are forecast to remain high at 1.9 million tonnes. Ukraine rapeseed
supplies will be highly price competitive in the export market after
a 55% depreciation of its currency this year. Also, Ukraine's trade
prospects within Europe were enhanced in July with ratification of
an agreement to liberalize market access for all goods - including
agricultural commodities."
The ERS predicted that global oilseed trade will shrink in 2014-15
because of bigger crops in the main importing countries. "The biggest
impact of larger E.U. and Ukraine rapeseed crops may be on exports
from Australia, which are forecast 200,000 tonnes lower this month to
a 4-year low of 2.45 million tonnes," it said. "In addition, lower rapeseed imports for China will likely deter Australian shipments."
The USDA cut its forecast for China's rapeseed imports in 201415 by 300,000 tonnes to 3.2 million due to an increase in domestic
supplies. "Good growing weather pushed China rapeseed yields for
2014-15 to an all-time high, which boosted production to a record
14.7 million tonnes," it said.
The exception to the USDA's crop prediction is Canada. "June
flooding in the Prairie Provinces is expected to reduce harvested area
for canola by 300,000 hectares this year to 7.7 million," the ERS
said. "Canola fields that avoided flooding are doing very well, but
the washed-out croplands reduce the 2014-15 production forecast for
Canada by 450,000 tonnes this month to 15.25 million."
Total supplies in Canada are reduced even further due to smaller than
expected carryover stocks, it said. "Strong exports this spring reduced
the expected stocks carryout for 2013-14 to 2.5 million tonnes from the
previous estimate of 3.1 million. That reduction contributes to a lower
forecast for 2014-15 ending stocks at 2.3 million tonnes."
Chris Lyddon is World Grain's European editor.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to worldgrain@sosland.
com. For reprints of WG articles, e-mail reprints@sosland.com.

September 2014 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - September 2014

Table of Contents for the Digital Edition of World Grain - September 2014