That agency estimates a canola crop of 19.5Mt and a yield estimate of 2.3t/ha, slightly below the pre-drought five-year average. “We believe this is a relatively conservative yield estimate and greater confidence can be had in the recovery of production, with the potential for higher yields,” said the CRM Agri team in its latest oilseeds market review.
EU rapeseed production confidence has also increased, with the latest EU MARS report raising the harvest yield estimates from 3.13t/ha to 3.15t/ha.
“The EU oilseed rape harvest is estimated at 18.83Mt, the largest crop since the 2017 harvest, far larger than the 17.95Mt being estimated by the USDA.
“With an improved production outlook, import requirements are estimated at 4.5Mt, 1Mt lower than last season’s requirement,” said the UK analysts.
Rapeseed imports have also continued at a record pace, they noted, with 973Kt of rapeseed imported into the EU already this season, over 250kt more than the same time last year, leaving a 3.5Mt remaining import requirement in a season where Ukraine has limited export options, Canadian production recovery, and likely the second largest harvest on record out of Australia.
Weather favoring US soybean production
Looking to the soybean market, and US production confidence has increased over recent weeks with kinder weather and greater yield certainty.
“Despite what has been a continued dry period with heat stress for central US states, the findings of the ProFarmer tour for the same yield expectations as the USDA is somewhat surprising and provides a degree of confidence for supply. In addition, weather across the US has also been kinder for US soybean production outlooks and crop condition scores and although still somewhat concerning, have stabilized in recent weeks.”
Looking further ahead, Brazil presents a long-term risk for US soybean markets with a rebound in production penciled in following the drought impacted crop of 2022, reads the report.
Brazilian organization, CONAB, is forecasting that the 2022/23 soybean crop will be 150.3Mt, which represents an increase of 21% compared to last year and slightly larger than the USDA’s provisional estimates of 149Mt.
“However, there is little certainty in Brazilian production at this stage and any signs of drought or adverse southern hemisphere conditions has the potential to quickly remove this long-term pressure,” commented the CRM Agri team.
Vegetable oil prices
Crude oil continues to be very volatile, caught between potential supply cut statements by OPEC+ while global recession risks are providing a pessimistic outlook for demand, reported the grain and oilseed market specialists.
“After a recent climb higher—back above $100/Bbl—crude has recently come crashing back down. Volatility is likely to remain high while both supply and demand remain uncertain. With what has been a relatively sideways but volatile crude oil market, the down trending vegetable oil market plateaued. Without a further decline in crude oil, vegetable oil values—especially palm oil—are likely to remain supported.
“However, the spread between vegetable oils remains high and are just beginning to narrow, especially in EU markets with rapeseed under pressure as new crop supplies become available and sunflower imports build.”