The weight of rising Brazilian output and expectation of higher US soybean plantings have forced soybean prices back to the October lows, according to a report from CRM AgriCommodities.
However, Brazilian soybean farmers are cautious about selling due to currency challenges, said Benjamin Bodart, director of that group.
The Brazilian real has gained around 20% against the US dollar from a year ago and that is having a negative impact on domestic prices and curbing exports from the Latin American country.
Bodart gave us the low down on feed crop dynamics ahead of the USDA planting report tomorrow, in which a large shift from corn into soybean is expected.
Taking the temperature of the US grain market, he noted a new round of fund selling last week as speculators involved in the US wheat and grain complex got wind of the forecasts of rain for the US plains – Kansas and Nebraska - following a three to four week stretch of dry weather.
“US farmers are well ahead of the average rate in terms of corn planting, and a record area of soybean is expected to be planted in the US as well leaving things there slightly bearish.
“But we still have to get through the usual summer weather market, the critical period for yields in terms of US soybeans is in August, as regards US corn, July is a crucial time for flowering,” he added.
On other weather related matters, he said analysts are predicting an El Nino event at some stage in 2017, which could make things less bearish. “However, buyers are fully aware the market remains oversupplied this year, given the massive global grain stock levels.”
Buyers, he said, are not in a hurry to book forward considering also the buoyancy in the European wheat market: “Growing conditions in European wheat producing countries such as France and Germany are so much better in comparison to March and April 2016. “Winter kills have been practically non-existent and there is has only been frost in a few pockets of cropland in Europe. Crop reports for the UK, France and Germany are very good.
“We expect, though, that wheat exports to North African countries will be higher than the market has anticipated towards the end of the campaign and that factor could be supportive of prices, but, in general buyers are in control of the market.”
Tight fundamentals remain in place for EU rapeseed, noted the CRM analyst. Competitive canola supplies, though, are starting to provide relief, particularly from Australia.