Global Oilseed Market: Geopolitical and Inflationary Pressures Continue, Spring Planting Prospects Eye-catching

 

July 2022 soybean futures on the Chicago Board of Trade (CBOT) settled at around $16.
6525 a bushel as of Thursday (Friday is a Western holiday), down 2.
75 cents, or 0.
2%, from a week earlier
.
Cash US Gulf No.
1 soybeans were quoted at $18.
0225 a bushel ($662.
2 a tonne), down 18.
25 cents, or 1%, from a week ago
.
On the Euronext exchange, August rapeseed futures settled at around 860.
25 euros per ton, up 36 euros or 4.
4% from a week earlier
.
The July rapeseed on the Intercontinental Exchange (ICE) closed at 1142.
50 Canadian dollars per ton, up 3.
7 Canadian dollars or 0.
3% from a week ago; the FOB spot price of Argentina's upper river soybeans was US$654 (including 33% export tax), which was higher than a week ago.
Down $6 or 0.
9%
.
July 2022 soybean futures on the Dalian Commodity Exchange closed at around 6,193 yuan/ton on Friday, down 50 yuan or 0.
8% from a week ago
.
The ICE U.
S.
Dollar Index closed at 100.
315 on Thursday, up 0.
5% from a week earlier
.

 

　　International crude oil futures rose more than 8% this week, ending the losing streak of the past two weeks, as news emerged that the European Union may ban imports of Russian crude oil in stages
.
On Thursday, the most actively traded West Texas Intermediate (WTI) May contract on the New York Mercantile Exchange (NYMEX) was at $106.
95 a barrel, up 8.
8% from a week ago, while the global benchmark Brent crude oil futures for June It closed at $111.
7 a barrel, up 8.
7% from a week ago
.

 

　　Global inflationary pressure continues, and the conflict between Russia and Ukraine remains tense

 

　　Grain futures and soyoil on the Chicago Board of Trade (CBOT) were higher this week, with Malaysian palm oil posting its biggest weekly gain in more than half the second half
.
Amid rising inflation in the U.
S.
and the rest of the world, the pattern of wild swings in agricultural markets remains unchanged based on uncertainty surrounding the Russian-Ukrainian conflict
.
In the United States, annual inflation was 8.
5% in March, the highest reading since 1981
.
Analysts expect the Fed to raise interest rates by 0.
5 percentage points at the FOMC meeting in early May, and possibly even 0.
75 percentage points, to curb surging inflation
.

 

　　At the same time, the chances of a quick resolution to the Russian-Ukrainian conflict are dwindling, as the West seems more willing to see the conflict continue
.
During negotiations in Istanbul, Ukraine said it would no longer pursue NATO membership, while Russia announced that it would significantly reduce military operations in cities such as Kiev
.
But Russia's withdrawal was seen as underpowered, and Ukrainian forces then crossed the border to attack Russian territory and this week claimed to have used missiles to attack the flagship of Russia's Black Sea Fleet, the Moscow
.
Russia stepped up its offensive in the east and issued an ultimatum on Sunday to the remnants of Ukrainian defenders in Mariupol, but the two sides are still fighting
.
Western countries led by the United States have increased sanctions on Russia and provided Ukraine with a large amount of military aid and weapons
.
An extension of the conflict is likely to lead to the expansion of Western sanctions on Russian energy and agricultural products, or it can be said that the longer the conflict drags on, the more bullish the energy and grain markets will be
.
At the same time, even if the conflict between Russia and Ukraine is resolved, NATO led by the United States may still create a similar crisis in the Asia-Pacific to achieve geopolitical interests, which may seriously disrupt the global agricultural supply chain
.

 

　　Global food supply chains face prolonged disruption

 

　　Commodities ranging from wheat to crude oil prices will continue to fluctuate wildly as global supply chains are reassessed in the wake of the Russian-Ukrainian conflict, said Gregory Brossard, head of global financial trading at the risk management division of agricultural giant Cargill
.
Even if the Black Sea conflict is over, Western countries may continue to impose economic sanctions on Russia, which will prompt a reconsideration of where and how vital supplies such as food, fertilizer and fuel are sourced and produced, Brossard said
.
To be cautious, countries may start stockpiling commodities, making supplies even tighter after the conflict ends
.
He added that when the West starts imposing sanctions on Russia, those sanctions will not stop overnight, which will affect the trade in raw materials
.
With the U.
S.
already facing its worst inflation in four decades, countries clearly need to reduce their reliance on key commodities from politically unstable countries
.
Countries are also looking for new biofuel raw materials other than food, and more and more oil companies hope to produce biodiesel from raw materials such as soybeans and rapeseed
.
People are trying to turn everything from wood to cow dung into fuel, Brossard said
.
With all kinds of technology on the table, the question is, are we giving up half of our food to fill up the gas tank? He said everyone is guessing how the energy transition will unfold, but in the near term, one thing is clear: the move will be highly disruptive
.

 

　　Spring planting in the northern hemisphere kicks off, weather markets could lead to extreme price volatility

 

　　At a time when global supplies of grains and oilseeds are tight and prices have hit record highs in more than a decade, global markets are paying more attention to the progress of spring planting in the northern hemisphere to ease the current supply constraints and replenish inventories
.
Spring planting in the U.
S.
has gradually begun, but cold and rainy weather in some areas (the eastern corn belt) has slowed corn planting progress, leading to speculation that more corn land may be converted to soybeans this year
.
The U.
S.
Department of Agriculture late last month expected U.
S.
soybean plantings to hit a record 90.
95 million acres this year, up 4.
3 percent from a year earlier
.

 

　　The forecast issued by the weather agency showed cold to well below normal temperatures in the western U.
S.
corn belt Thursday through Sunday
.
In the eastern corn belt, isolated showers are expected Monday through Wednesday
.
Mostly dry Thursday to Friday
.
Temperatures are below to well below normal Monday through Wednesday, near to below normal on Thursday, and near to above normal on Friday
.

 

　　China's soybean imports are lower than expected

 

　　Chinese customs data showed soybean import demand in March was well below a year earlier, as bad weather delayed Brazil's soybean harvest and exports
.
China imported 6.
35 million tonnes of soybeans in March, down 18% from 7.
77 million tonnes a year earlier
.

 

　　The U.
S.
Department of Agriculture’s weekly export sales report showed that U.
S.
soybean net sales for 2021/22 were 550,000 tons for the week ended April 7, 2022, 31% lower than last week and 41% lower than the four-week average
.
Net sales for 2022/23 were 460,000 tonnes, up from 300,000 tonnes a week earlier
.
Year-to-date U.
S.
soybean export sales totaled 56.
64 million tons, down 6.
8 percent year-on-year
.
Among them, 29.
18 million tons were sold to mainland China, a year-on-year decrease of 18.
3%
.
Private U.
S.
exporters on Thursday reported sales of 132,000 tonnes of soybeans to China for delivery by the end of August
.
Delivery 2021/22
.
As of April 13, soybean export prices for recent shipments in the Gulf region were at US$669 per ton, compared with US$665 per ton in Brazil’s Paranagua port and US$654 per ton in Argentina’s Upper River region.

.

 

　　South American soybean harvest is entering its peak

 

　　This time of year is the peak season for soybean harvest in South America, and the Brazilian soybean harvest is nearing its end.
Brazil's National Commodity Supply Company said that as of April 2, the national soybean harvest was 81.
2% complete, up from 79.
1% in the same period last year
.
Harvesting has now ended in the Midwest
.
In Argentina, the soybean harvest was more than 14 percent complete as of April 13
.
Brazil's two private institutions (StoneX and AgResource) recently raised Brazil's soybean production, but it is still well below the same period a year earlier
.
The pace of sales by Brazilian farmers has generally lagged a year earlier, as farmers have enough cash on hand to rush to sell soybeans and wait for prices to rise further
.
The pace of soybean sales for the new season also lags behind previous years, as a shortage of fertilizer supplies and rising prices have led farmers to be conservative about selling soybeans for the next season
.

 

　　In Argentina, high domestic inflationary pressures means strikes will remain active this year as workers' incomes have not kept pace with inflation
.
A strike by truckers in Argentina from Monday to Thursday brought soybean and corn shipments to major grain ports to a near halt, with drivers demanding higher grain shipping rates to offset rising fuel prices
.
According to reports early Friday, Argentina's transport ministry said the striking truck drivers had agreed on Thursday night to end the strike
.
Sources with knowledge of the talks said the fares had been increased by 20% and the drivers agreed to end the strike immediately
.
On Wednesday, Argentina's March inflation rose by 6.
7% month-on-month, the highest month-on-month increase in 20 years; the March inflation rate was an annualized 55.
1%
.
Some experts expect Argentine inflation to approach 60% this year
.

 

　　Worrying outlook for global oilseed supply next year

 

　　Ukrainian sunflower oil exports have been disrupted as the conflict between Russia and Ukraine continues
.
Prospects for sunflower and rapeseed planting in Ukraine this spring are also under threat
.
The Ukrainian Grains Association (UGA) expects this year's sunflowerseed production to fall by 42% to 9.
8 million tonnes
.
The reduction in Ukrainian crop seed production due to the conflict between Russia and Ukraine may affect the country's food production in the next few years, the French Seed Producers Association (UFS) said on Thursday
.
Ukrainian seed production could fall by as much as half this year
.
France is Ukraine's main seed supplier, but this year's farmers' planting plans have been set, so there is little way to offset the drop in Ukrainian seed production
.
This could affect the seed supply outlook for the next two years
.

 

　　Canadian canola production expected to rise sharply, but dry weather worries

 

　　The U.
S.
Agriculture Counsellor expects Canadian canola production to reach 19 million tonnes in 2022/23, an increase of about 51% year-over-year, as yields recover in much of eastern Saskatchewan, Alberta and Saskatchewan Plantings in Vancouver are expected to increase
.
Rapeseed prices are high, especially those representing new season crops, which are hitting new highs in a row, and domestic inventories are extremely tight, which will encourage farmers to grow rapeseeds this year
.
However, the weather in the prairie area continues to be dry, and the high prices and tight supply of chemical fertilizers and pesticides will affect the yield and quality of rapeseed and farmers' willingness to plant, and also greatly reduce the expectation of a bumper harvest
.
More widespread rainfall is desperately needed in much of Saskatchewan and Alberta to ease the current drought
.
Above-average rainfall in these areas between November 2021 and mid-March 2022, but continued lack of rainfall last year, requires more rainfall to replenish soil moisture
.