World Grain -- December 2015 - 20

GRAINMARKET REVIEW

Oilseeds
Bearish USDA report weighs
on well supplied market

Soybean prices
(per tonne)

400
350
300
250
200

by Chris Lyddon

150

An increase in the U.S. Department of Agriculture's (USDA's)
estimate for U.S. 2015-16 soybean production added to the overall
picture of a well supplied oilseeds market and turned market sentiment in more of a bearish direction.
"World soybean markets eased during November, with the IGC GOI
sub-index falling by 3%," the International Grains Council (IGC) said
in its Grain Market Report at the end of November. "Despite good underlying export demand, pressure stemmed from prospects for ample
global supplies, with better than expected harvest results in the U.S.
and improved planting conditions in South America."
U.S. soybean futures posted losses of up to 3% over the month on
a bearish supply outlook, highlighted by USDA's November WASDE report, which included upward revisions to forecasts for U.S.
production and stocks, it said.
"U.S. dollar strength pressured, as did talk that Chinese processors
had secured new crop supplies from Brazil. However, losses were
limited by supportive technical features, slow producer selling and
¿UPH[SRUWLQWHUHVWDV*XOIYDOXHVIHOOE\WRIRE,Q%UDzil, where plantings for the 2015-16 harvest are seen reaching a new
SHDNH[SRUWTXRWDWLRQV0DUFKGLSSHGE\WR
³,Q$UJHQWLQDVSRWSULFHVGHFOLQHGVOLJKWO\WRIREDVSUHVsure from weakness in the U.S. outweighed mild support from reluctant producer selling. ICE canola futures in Canada were narrowly
mixed in November, with nearby contracts weighed by weakness in
soybeans. However, losses were capped by slow farmer selling and
strong local demand. MATIF (France's exchange) rapeseed futures
were little changed, mildly underpinned by tight world supplies,
FXUUHQF\PRYHPHQWVDQGFRQFHUQVDERXWFURSSURVSHFWVLQ
Ukraine."
The USDA's World Agricultural Supply and Demand Estimates
report for November forecast U.S. oilseed production for 2015-16 at
PLOOLRQWRQQHVXSPLOOLRQIURPWKHSUHYLRXVHVWLPDWHRQ
increased soybean production.
It put U.S. soybean production in 2015-16 at 108.5 million tonnes,
up from its previous estimate of 105.81 million, and a record level,
on higher yields.
The report forecast global oilseed production for 2015-16 at 531
million tonnes, down slightly from the previous month.
³/RZHU VXQÀRZHUVHHG DQG FRWWRQVHHG SURGXFWLRQ DFFRXQW IRU
most of the change with nearly offsetting increases projected for soybeans and rapeseed," it said.
It forecast global soybean production at 321 million tonnes, up
500,000, "with the larger U.S. crop only partly offset by reductions
for India, South Africa, and Uruguay."
³7KH,QGLDVR\EHDQFURSLVUHGXFHGPLOOLRQWRQQHVWRPLOlion on lower projected yields," it said. "Inconsistent rainfall during
the growing season and late-season heat results in below-average
yields for the third consecutive year."

100

Oct 2015

Sep 2015

Aug 2015

Jul 2015

Jun 2015

May 2015

Apr 2015

Mar 2015

Feb 2015

Jan 2015

Dec 2014

Nov 2014

Oct 2014

Chicago Soybean futures contract (first contract forward) No. 2 yellow, U.S.
dollars per tonne.
Source: USDA

*OREDOUDSHVHHGSURGXFWLRQLVUDLVHGWRPLOOLRQWRQQHV³,Qcreased production projected for Canada is only partly offset by reductions for Australia, Pakistan, and Russia," it said.
The verdict of Rabobank on the WASDE report was, "bearish, as
U.S. yield boost surprises even the most bearish in the market."
In its Oil Crops Outlook, the USDA Economic Research Service
noted that "USDA anticipates higher global imports of soybeans in
2015-16 with gains for China, the European Union (E.U.), Russia,
and Thailand."
"The largest increase was for China, where imports were forecast
PLOOLRQWRQQHVKLJKHUWRPLOOLRQDQGXSIURPPLOOLRQIRU
´LWVDLG³0RUHJOREDOWUDGHIRUVR\EHDQVLVOLNHO\WREHQH¿W
exports from Brazil, Argentina, and the United States. An expansion
of shipments from those countries would more than offset an expected reduction of trade from Uruguay, due to a smaller crop there."
Argentine soybean shipments this fall have been robust, it said.
"Brightening prospects for Argentine exports for 2015-16 led to a
forecast increase by 1 million tonnes to a six-year high of 10.8 million. This month, Brazil soybean exports for 2015-16 are forecast
WRQQHVKLJKHUWRPLOOLRQ´LWVDLG³,Q2FWREHUROGFURS
soybean shipments from Brazil were winding down but nevertheless
set a record high for the month at 2.6 million tonnes. By February
2016, much larger shipments may resume upon the harvesting of an
expected record high 2015-16 crop.
"Rising soybean prices in Brazil have encouraged an unusually
high amount of forward sales this year. Coupled with improved port
logistics, that could prompt a faster increase of new-crop shipments.
At the Port of Paranagua, the October completion of an expansion of
ship loading capacity will shorten the time that vessels are berthed
WKHUH7KHQHZHTXLSPHQWDOVRHQKDQFHVWKHSRUW¶VHI¿FLHQF\E\DFcommodating larger vessels."
Chris Lyddon is World Grain's European correspondent.
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.

December 2015 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain -- December 2015

Table of Contents for the Digital Edition of World Grain -- December 2015