The UK analysts weekly look at the oilseeds market found that the Australian canola area has expanded, up to a forecast 3Kha, from 2.4Kha in 2020 and just 2Kha in 2019. With an expanded area, and what have been relatively favorable conditions so far, yield confidence is buoyant.
“Although Australian canola won’t be available for import until the spring, a larger availability of canola in the spring reduces the likelihood of a spring price rally.
“While rapeseed values have remained very well supported, in part due to the crop reductions for Canada, rapeseed oil competes against soybean oil and linked too with palm, therefore there is a very strong relationship between European rapeseed and US soy oil futures. New crop soybean oil has failed to push significantly higher since the June price spike, and as the US soybean harvest nears there is an increasing probability for a reversal in global vegetable oil markets,” they noted.
The most recent USDA WASDE report contained few bullish changes for soybeans, and on Tuesday this week, the USDA released their weekly crop progress report: Corn and soybean crop conditions scores were both downgraded, but beneficial volumes of rainfall are forecast for the US later this week.
The rainfall in the 1-7 day outlook will likely prove beneficial for potential US soybean yields, commented the CRM Agri team.
“August will continue to be a key month for US soybean development and should the rains arrive, then there will likely be additional pressure on new crop oilseed markets.”
Although US soybean production confidence is growing, price is largely determined by the combination of meal and oil, they added.
“US soybean meal prices have continued to trade at near 2021 lows, and with what will remain relatively tight stocks following the 2020/21 season, we remain cautious that further downside is limited although likely to remain under pressure.”
Meanwhile, the CRM Agri report noted that there has been a further sale of US soybeans to China, with the Asian behemoth purchasing a further 131Kt for delivery in 2021/22.