Brazilian soybean harvest continues to disappoint, sunflower supply risks add pressure to rapeseed market, palm oil concerns
Canola plantings are estimated to be down 7% from last year, giving way to wheat, estimated to increase by 7.2%, founds Statistics Canada in a new data release yesterday.
In an oilseeds market outlook, CRM Agri said that rapeseed stocks are expected to remain tight into the 2022/23 season. The Black Sea conflict-related sunflower supply risks are compounding the issue, switching additional demand to rapeseed, in addition to the fact that recovery in Canadian canola production is expected to be lower than previously anticipated.
The UK experts also noted that the Brazilian soybean harvest has continued to record disappointing yields as the harvest enters the final stage. “Yields in Mato Grosso having been found to be down over 50% from initial expectations.”
With the outlook for soybean availability remaining tight due to strong levels of demand, CRM Agri anticipates that the US Department of Agriculture (USDA) will need to, once again, revise downward the old crop ending stocks. “With a drought impacted Brazilian crop and tight US stocks, there remains plenty of upside risk for the oilseed market and very little room for error this growing season.”
The restrictions related to COVID-19 outbreaks in China have put a dampener on crude oil and commodity markets, they added.
Increased COVID-19 testing in Beijing is increasing the likelihood of additional lockdowns in China, leading to an assumed curb to consumption there, said the commodity-market specialists.
Palm oil market concerns
There have been other developments of late in the vegetable oil markets, said CRM Agri.
“There was confusion last week as reports emerged that Indonesia was moving to ban palm oil exports. There have still been only limited official government reports on the matter, and subsequent media reports have stated that crude palm oil will continue to be exported, while refined products are restricted, although crude palm exports only account for the minority of exports. National protectionism to curb inflation is the reason behind the move, which has the potential to spill over to other [exporting countries.] A lengthy ban on palm exports would be bullish for vegetable oil markets.”
Dryness in Brazil continues to be a concern for second corn, said the UK team.
“NDVI scores are holding up, but there has been a lack of precipitation, especially in Mato Grosso. Dryness in the US is also causing concern with winter wheat of particular concern. With little rainfall forecast, the persistent dry conditions are reducing the potential wheat crop size, especially in Texas and Kansas. Favorable conditions are currently supporting yield potential for European and Black Sea crops.”