Heat eroding confidence in US soybean crop, but expectations high for Canada's canola harvest

By Jane Byrne

- Last updated on GMT

© GettyImages/Abstract Aerial Art
© GettyImages/Abstract Aerial Art

Related tags Canola Rapeseed soybeans Ukraine

Demand for soybeans remains subdued and the dollar remains exceptionally strong, further dragging on demand levels, while the war in Ukraine continues to support global rapeseed values, finds a report from CRM Agri.

EU rapeseed yields have remained relatively encouraging with the latest EU MARS report forecasting total EU yields of 3.13t/ha— slightly above the five-year average of 3.07t/ha—despite the drought conditions experienced in Spain and parts of France.

Offsetting, the below average yields in Spain are projections of yields for Germany at 5.6% higher than that country's five-year average.

While harvest yields are starting to be quantified in Europe, the Canadian canola harvest won’t commence for at least another month—before drawing to a close in October. Despite the recent heatwave that spread up through central US states and into Canada, crop production confidence remains high, said those UK analysts.

Heat eroding confidence in US soybean crop 

The recent hot and dry weather in central US states is taking its toll and has ended increasing crop confidence in soybeans, however, they noted.

Consequently, the previous week’s bearish market moves have been unwound, said the agri commodity market specialists.

“Looking ahead, forecasts for the majority of soybean producing regions remain mixed, due to projected rainfalls and above average temperatures offsetting each other. This weather driven volatility is to be expected at this point in the growing season, but with now 64% of US soybeans having reached the more yield critical blooming phase and 26% now setting pods, detrimental weather outlooks will continue to provide market upside.

“Amid new crop supply confidence coming under pressure, US soybean demand remains relatively minimal, offsetting the otherwise bullish outlook.”

US export sales

The analysts added that last week was more encouraging for US soybean export sales, which hit a four-week high—combined new crop weekly sales stood at 254.7Kt.

“However, this pace remains historically slow and new crop sales over the last eight weeks at just over 2Mt remains far below average, which continues to point to a weakening demand outlook.”

Further ahead, there are limited strong downside market drivers until the start of the US harvest in October, which coincides with the start of a likely record Brazilian planting campaign and a sustained easing of global supply tightness in Q1–Q2 2023, they noted.

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