World Grain - January 2022 - 16

GRAINMARKET REVIEW
OILSEEDS
COVID-19 concerns weighing on prices
by Chris Lyddon
Oilseed prices came off record highs as 2021 neared its close,
with the primary short-term driver being the market's concern
over the spread of the Omicron variant of COVID-19, with
signs that demand is slowing in foodservice outlets and governments
in some countries reimposing lockdown conditions.
The United Nations Food and Agriculture Organization
(FAO) said in its Food Price Index of Dec. 2 that global vegetable
oil prices had fallen by 0.2% in November, from the
record high registered the previous month.
" The slight decrease reflected somewhat lower values for
soy and rapeseed oils, while quotations for palm oil remained
virtually unchanged, " the FAO said. " International palm oil
prices maintained their firmness in November, with the downward
pressure linked to rising concerns over the impact of a
resurgence in COVID-19 cases largely offset by the support
stemming from the anticipation of production slowdowns in
major producing countries.
" As for soy and rapeseed oils, world prices retreated moderately,
broadly softened by demand rationing. Meanwhile,
lower crude oil values also weighed on vegetable oil prices. "
In its Nov. 18 Grain Market Report, the International Grains
Council (IGC) said its index for soybean prices was little
changed month on month, " with pressure from prospects for
heavy supplies and softer soya oil values offset by support
from an uptick in export demand. "
" Chicago soybean spot futures were moderately higher in
two-sided activity, " the IGC said. " Through mid-November,
the market was pressed lower by outlooks for a record global
outturn, reflective of a sizeable US crop, together with a swift
planting campaign in Brazil amid mostly favorable conditions.
" A
sizeable drop in soya oil values also weighed, as did
movements in outside markets at times. More recently, however,
values were underpinned by an uptick in international
sales, including to China as processing margins there improved.
However, with Gulf basis levels dropping month-onmonth,
US export quotations decreased by 1%, to $504 fob. "
While being thinly quoted, spot export prices in Brazil (Paranagua)
fell by 2%, to $516 fob, as sentiment was weighed
by rapid planting progress, the IGC said.
" With a potentially record crop on the horizon, premiums
headed lower, also linked to reports that producers were sell16
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Soybeans (US), c.i.f. Rotterdam
ing old crop stocks to free up space for fresh supplies, " the
Council said. " In Argentina, where the market was considered
nominal, nearby prices were modestly firmer month on
month, at $556 fob Up River, with downside likely limited
by a relatively tighter fundamental backdrop despite pressure
from currency movements. "
Regarding rapeseed, the IGC reported that reflecting supportive
fundamentals, ICE canola futures in Canada posted a
net gain of 6% month on month, albeit with advances partly
capped by weakness in soybeans and vegetable oils at times.
Nominal export quotations jumped by $42, to $869 fob Vancouver.
" In
contrast, Euronext rapeseed futures in the EU declined
by just under 1% month on month, pressured by new crop
arrivals, prospects for larger 2022-23 winter plantings and
weakness in other oilseeds and products markets at times, "
the IGC said. " Canola export prices in Australia declined by
$36, to $742 fob (Kwinana), pressured by new crop arrivals,
with both wheat and canola being prioritized for export. "
A Dec. 16 report from ADM Agriculture in the United
Kingdom, authored by Will Ringrose, the company's head of
Oilseeds, noted that soybean prices at the CBOT had been
" strongly supported by a rally in soy meal, which was supported
by reports of low meal yields and tight supplies just as
usage is starting to ramp up. "
" South American weather showed showers this week before
turning dry with little rain in the two-week forecast, " Ringrose
said. " Weather will be closely watched as we head into 2022. "
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, email reprints@sosland.com.
January 2022 / World Grain / World-Grain.com
Source: ISTA Mielke GmbH; Oil World; USDA; World Bank
http://www.World-Grain.com
World Grain - January 2022

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