World Grain - January 2015 - 22

GRAINMARKET REVIEW

Oilseeds
Huge U.S. harvest weighs
on soybean prices

Soybeans: World supply and demand
325 million tonnes
World consumption
300 World production

million tonnes 30
Stocks: major exporters1
25

275

250
15

by Chris Lyddon

225

A big U.S. harvest has pushed soybean prices down as the U.S.
has been exporting at a record pace. And it's not just the U.S.; world
oilseed production is projected at a record.
"After the previous month's weather-inspired gains, the IGC GOI
soybean sub-Index was marginally lower when compared to late October," the IGC said in its Grain Market Report at the end of November. "Losses were linked to the advancing harvest of what is expected
to be a huge U.S. crop, while improved planting conditions in South
America added to the negative tone.
"In a month of sometimes choppy activity, U.S. soybean futures
were little changed. Although sentiment was mildly underpinned by
solid export demand and strength in soymeal - tied to logistical issues and tight pipeline availabilities - gains were capped by pressure from increased farmer sales as the U.S. harvest accelerated amid
much improved conditions.
"Underscoring prospects for an exceptional outturn, USDA's November WASDE update placed the U.S. crop slightly higher than

200

2015-16**

2014-15*

2013-14

2012-13

2011-12

2010-11

0
2008-09

from currency movements."
In its Oil Crops Outlook, the USDA's Economic Research Service
drew attention to the record pace of U.S. soybean exports.
"U.S. export sales commitments of soybeans this season are at an
all-time high," it said. "The outstanding sales are now falling rapidly,
however, due to a robust pace of shipments."
According to the USDA's World Agricultural Supply and Demand
Estimates report for December, "Global oilseed production for 201415 is projected at a record 530.7 million tonnes, up 1.8 million tonnes
from last month."
"Foreign oilseed production accounts for most of the change on
al soybean production is projected at a record 312.8 million tonnes
with gains this month for Canada, Ukraine, and Paraguay. Global
rapeseed production is projected at a record 71.9 million tonnes, up
1.2 million mainly on increased production for Canada, which is estimated at 15.6 million tonnes based on the latest survey results from
Statistics Canada."
The USDA projected global oilseed trade for 2014-15 at 135.3

150
2007-08

steady, at $425 fob (Paranagua), IGC said.
"In sometimes volatile activity, ICE canola futures in Canada
were fractionally lower, as weakness in soybeans outweighed support from reluctant farmer selling and good demand from exporters
and domestic crushers," the IGC said. "E.U. rapeseed futures eased
by around 1% on pressure from losses in neighboring markets and a

2006-07

America were little changed. In Brazil, where better weather allowed

175
2005-06

basis levels weakening markedly as combining advanced under good
conditions, coupled with lower transportation costs and increased
farmer selling, Gulf export quotations fell by $8, to $434 fob."

1 Argentina, Brazil, U.S.
* Forecast
** Projected
Source: U.S. Department of Agriculture

million tonnes, up 800,000 from last month. "Soybean exports account for most of the change with higher projections for the United
States, Paraguay, Ukraine, and Canada only partly offset by reductions for Argentina and Brazil," it said.
U.S. producers group, the American Soybean Association, has
welcomed news of normalized U.S. relations with Cuba. "Soybean
growers are particularly excited about today's announcement, spefor American beans, but also in the larger scope of trade's ability to
overcome even the most challenging geopolitical barriers," said ASA
President Wade Cowan in December.
"Trade builds bridges between nations, but it also generates real
and concrete value for American farmers by expanding and strengthening our opportunities in foreign markets. Whether it's the burgeoning Cuban demand for pork, poultry and dairy, or that nation's excant market opening just off our own shores."
Rabobank, in a report called "Outlook 2015 - Rebalancing After
Finding the Lows," took a bearish view of soybeans. Soybean prices
are expected to move downwards by Q1 2015 and then sideways to
bobank said. "While we expect continued price volatility, the daily
volatility will be below that of previous years."
"The huge U.S. crop in 2014, combined with the expected record
crops in South America in 2015, will ease the global balance sheet,"
it said.
"We believe prices are likely to stay below the futures forward
curve if the forecast record crops in South America materialize," the
bank said.
"However, climatic conditions between December and February
will be critical and prices will be subject to short-term rallies on any
weather scares."
Chris Lyddon is World Grain's European editor.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to worldgrain@sosland.
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