World Grain - May 2020 - 19

GRAINMARKET REVIEW

OILSEEDS
Pandemic uncertainty hits market
by Chris Lyddon

350
300
250
200
150
100
50
Mar 20

Feb 20

Jan 20

Dec 19

Nov 19

0

Oct 19

18

(in US dollars per toone)

400

Sep 19

Sentiment in the oilseeds market has been dominated by fears
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on demand as lockdowns change what and where people eat. At
the same time, the sharp fall in crude oil prices also has hit values.
In an April 20 report, the UK's Agriculture and Horticulture
Development Board (AHDB) said world oilseed prices had been
SXVKHGORZHUE\ZRUULHVDERXW&29,'¶VH൵HFWRQGHPDQG
"Brent crude oil futures dropped back below $30/barrel, as
more organizations lowered demand forecasts due to lockdowns
around the world," the AHDB said. "Reduced fuel demand is hitting demand for biodiesel, and so vegetable oils."
The AHDB also pointed out that Malaysia had delayed the introduction of a higher biodiesel blend because of the crisis.
It noted slow US export sales of soybeans.
"Despite strong crush demand in March, the pace of exports is
H[DFHUEDWLQJFRQFHUQVWKDWWKH86VWRFNVPD\ULVHHYHQ
further," the AHDB said.
The AHDB also pointed out that the Brazilian soybean harvest
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have a big crop.
A more bearish factor was news that China expects to import
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E\  DV GHPDQG UHFRYHUV IURP WKH H൵HFW RI$IULFDQ VZLQH
fever on its pig herd.
Rapeseed prices in Europe are also lower, the AHDB said, but
the trend has been limited by a fall in the euro against the US
dollar.
7KH8QLWHG1DWLRQV)RRGDQG$JULFXOWXUH2UJDQL]DWLRQ)$2
in its monthly Food Price Index, published April 2, said vegetable
RLOSULFHVKDGIDOOHQE\LQRQHPRQWKUHDFKLQJWKHORZHVW
OHYHOVLQFH2FWREHU
"The continued decline in March mainly stemmed from fresh
falls in palm oil prices, for the second consecutive month, which
was fueled primarily by plunging crude mineral oil prices and risLQJXQFHUWDLQWLHVRYHUWKHLPSDFWRIWKH&29,'SDQGHPLFRQ
JOREDOGHPDQG´WKH)$2VDLG³2WKHURLOVIROORZHGWKHGRZQward trend in palm oil."
7KH)$2DGGHGWKDW³VR\DQGUDSHVHHGRLOSULFHVZHUHDOVRDIfected by, respectively, higher-than-expected crushings in the US
and eroding demand for biodiesel in the EU."
,QLWV$SULO2LO&URSV2XWORRNUHSRUWWKH86'$¶V(FRQRPic Research Service said soybean crops in southern Brazil and
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7KH86'$FXWLWVIRUHFDVWIRUWKH%UD]LOLDQFURSLQE\
PLOOLRQWRQQHVWRPLOOLRQ

Monthly soybean prices

Soybeans (US); CIF Rotterdam

Source: ISTA Mielke GmbH, Oil World; US Department of Agriculture; World Bank

"Rainfall was well-below average for much of Brazil throughout February and March," the USDA said. "That was not a major problem for most of Brazil's soybean-growing regions given
their advanced stage of soybean crop development. Record soybean yields are anticipated for several states. In contrast, the dry
spell is slashing crop yields for Brazil's last state to harvest (Rio
Grande do Sul)."
The crop will still be the biggest Brazil has ever produced.
A lack of rainfall and high temperatures between mid-February and mid-March had dried out soils in Argentina.
With expected yield and area reduced, the USDA cut its crop
forecast for Argentina by 2 million tonnes, to 52 million.
The International Grains Council (IGC) said in its March 26
Grain Market Report that average values for soybeans had been
marginally weaker over the previous month, with gains in Brazil
and the United States outweighed by a steep drop in Argentina.
Spot US soybean futures ended the month near unchanged.
"After initially advancing, prices fell steeply in sympathy
with a plunge in external markets on deepening worries about
the impact of the coronavirus pandemic on global economic activity," the IGC said. "Underlying export demand concerns also
ZHLJKHGUHÀHFWHGLQGLVDSSRLQWLQJZHHNO\VDOHVWDOOLHV0RUHUHcently, prices recovered on tightening soymeal availabilities, with
support, too, from reports that China had secured US supplies
and worries about South American shipping delays."
Brazilian export values were 2% higher at $348 fob.
"While the progressing harvest and currency movements
ZHLJKHG WKLV ZDV R൵VHW E\ ULVLQJ H[SRUW SUHPLXPV UHFHQWO\
OLQNHGWRVLJQVRI¿UPHUGHPDQGDVZHOODVFRQFHUQVDERXWSURduction prospects and logistical disruption," the IGC said.
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to
worldgrain@sosland.com. For reprints of WG articles, e-mail reprints@sosland.com.

May 2020 / World Grain / www.World-Grain.com


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