World Grain - September 2021 - 18

GRAINMARKET REVIEW
Monthly soybean price
(in US dollars per tonne)
OILSEEDS
Crop outlook, pandemic
uncertainties drive market
by Chris Lyddon
A reduced forecast for world oilseeds output injected a bullish
element into the market during August, but uncertainties
around the development of demand amid the continuing pandemic,
moves in the crude oil price and the weather contributed
to a choppy market.
In its Aug. 12 World Agricultural Supply and Demand Estimates
report, the US Department of Agriculture (USDA) projected
total global oilseeds production in 2021-22 at 629.52
million tonnes, down from 635.41 million forecast a month
earlier. The USDA put 2021-22 world soybean production at
383.63 million tonnes, down from the previous forecast of
385.22 million. US soybean output was cut to 118.08 million
tonnes from 119.88 million. Forecast production in Argentina
was unchanged at 52 million tonnes, as was that of Brazil at
144 million.
" Foreign oilseed production is reduced 3.6 million tonnes to
501.4 million, reflecting lower canola production for Canada
and sunflowerseed for Russia, " the USDA said. " Partly offsetting
that is higher Ukrainian sunflowerseed. "
Canada's canola crop is lowered 4.2 million tonnes to 16
million on drought in the Canadian Prairies, the USDA said.
Russian sunflowerseed production is lowered 1 million tonnes
to 15.5 million as pockets of dryness and extreme heat in key
regions lower overall crop prospects. However, the USDA
had raised its forecast for Ukrainian sunflowerseed output on
a wet spring, followed by " beneficial rains during June and
July in southern Ukraine. "
The USDA's forecasts triggered a short-lived rally. By Aug.
19, the British company United Oilseeds was reporting falls
in the European MATIF rapeseed market, as well as the US
soy complex and China's Dalian soybean market and noted
concern over Chinese demand for soybeans and wider Asian
demand for vegetable oil.
" There is concern about food demand due to travel restrictions
and lockdowns due to virus spread, " United Oilseeds
said. " China's feed and crush margins are also lower, which
could limit imports. "
United Oilseeds also noted declines in crude oil on concerns
over the effect of the resurgent pandemic on demand and a
stronger dollar.
" EU rapeseed supplies will stay tight until Australian seed
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Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21 Jul 21
Soybeans (US), c.i.f. Rotterdam
Source: US Department of Agriculture; World Bank
arrives in January/February 2022 or Canadian canola comes
into mainland Europe for biofuel use, " United Oilseeds said.
" However, Canadian canola will be expensive. "
In contrast, the International Grains Council (IGC) in its
July 29 Grain Market Report reported a rise of 6% in its soybean
price index from the previous month " stemming from
gains at all origins, linked to supportive fundamentals and
movements in other markets for oilseeds and products. "
Chicago soybean futures advanced by 3% on the month
in what IGC called " two-sided trade ... largely shaped by a
changeable Midwest weather backdrop and movements in
markets for other oilseeds and vegetable oils. "
Amid firmer US futures, export quotations at South American
origins advanced solidly, the IGC said.
" With logistical difficulties navigating the Parana River remaining
a key factor, export premiums in Argentina moved
higher, " the IGC said.
The Council also reported " support from reports that Chinese
processors purchased a number of competitively priced
cargoes for dispatch from southern ports. At $538 fob Up River,
export values rose by 7% m/m. "
The IGC said quotations also rallied in Brazil, rising by 7%
to $557 fob, despite a " somewhat disappointing export pace,
buoyed by broad-based strength in oilseeds and products. "
For rapeseed, the IGC said that in a two-sided volatile market,
ICE canola nearby futures in Canada rose by 14% m/m,
underpinned by ongoing crop worries due to sustained hot,
dry weather and tight old crop supplies.
" At $775 (Vancouver), fob values were up by 16% m/m, "
the IGC said.
Australian export prices rose by $31 to $578 fob (Kwinana),
with expectations for a bumper 2021-22 harvest, IGC said..
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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September 2021 / World Grain / World-Grain.com
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World Grain - September 2021

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