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Global oilseed market: inland river logistics in the United States are not smooth, and South American soybean production is in sight

 Last Update: 2022-11-04
 Source: Internet
 Author: User

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Foreign media news on October 30: In the week ending October 28, 2022, global oilseed prices mostly fell
.
Although China is buying U.
S.
soybeans again, the low water level of the Mississippi River has slowed down transportation from the inland to the US Gulf region, restricting the pace of sales during the peak export season of US soybeans.
Rainfall in some agricultural areas of Argentina and Brazil has facilitated soybean sowing and initial growth; At the same time, U.
S.
soybean crushing margins are at historic highs, boosting domestic processing demand; Argentine farmers slowed down sales, and reduced soybean crushing led to tight
supplies of soybean meal and oil.
Russia's announcement over the weekend to withdraw from the export agreement means that Ukraine's sunflower oil exports will face uncertainty
.
But whether soybean prices can eventually rise depends on the weather
in South America in the coming weeks.

January 2023 soybean futures on the Chicago Board of Trade (CBOT) closed at about $14.
0025/bushel on Friday, down 0.
3% from a week ago; The average spot price of U.
S.
No.
1 yellow soybeans for November shipping schedule in the US Gulf was $15.
7525 per bushel, down 0.
5% from a week ago; CBOT's December soybean meal was trading at $425.
40 a short tonne, up 1.
8 percent from a week ago; December soybean oil futures were at 71.
79 cents a pound, up 0.
4 percent from a week ago; Euronext's February 2023 futures closed at around €638.
75/mt, up 0.
3%
from a week ago.
Intercontinental Exchange (ICE) canola for January closed at C$864.
10/mt, down 1.
9% from a week ago; Argentina's Upper River soybean FOB spot quote was $594 a tonne (including 33% export tax), down 0.
8%
from a week ago.
The ICE dollar index closed at 110.
606 points on Friday, down 1.
23%
from a week ago.

The prospect of Fed rate hikes and uncertainty about the policy turn have led to cautious sentiment

The Fed is likely to announce a fourth consecutive 75 basis point
rate hike next Wednesday (November 2).
But according to Carolyn Bain, chief commodities analyst at Capital Economics, commodity markets have generally priced in the rate hike
.
But traders were cautious
before the Fed acted.
She added that while the sharp rate hike has been largely priced in by market prices, it would still have a dampening effect
on commodity prices.
Markets will also be watching Fed officials' statements after the meeting to see if they reveal information
about a slowdown in rate hikes in the future.

The U.
S.
soybean harvest is progressing faster than expected, but low inland water levels are affecting export logistics

USDA's weekly crop progress report shows that the U.
S.
soybean harvest is progressing more than expected
.
As of Oct.
23, the U.
S.
soybean harvest was 80 percent, compared with 71 percent a year ago and a five-year average of 67 percent, with an average analyst expectation of 77 percent
.

Just as new beans hit the market in batches, the Mississippi River remains historically low, continuing to slow inland transportation
to the Gulf of America.
The failure to ship new beans has not only slowed down the pace of U.
S.
soybean exports, but also caused a mountain
of soybean supply everywhere.
Maxar said at least 25 millimeters of rain will fall in much of the middle and lower Mississippi River next week, which could help start to improve river levels, but more rain
is needed.

Cargill's terminals in the Hickman area, Kentucky, and the Kaisberg, Illinois, both posted on its website this week, have stopped receiving deliveries
this week as low water levels in the Mississippi River continue to hamper grain shipments, as low water levels in the Mississippi River continue to hamper grain shipments.
Cargill's website in Hickman said the dock warehouse was filled with corn and soybeans because the Hickman terminal was closed
due to low water.
Until the river level changes, corn and soybeans
will not be received.
Mike Sternhawk, executive director of the U.
S.
Soybean Transportation Alliance, said Wednesday that the state of the inland waterway system remains "very worrying.
"
Given that exports typically account for 80 percent of U.
S.
soybean exports between September and February, low river levels pose a challenge
to the soybean industry.
The National Weather Service expects La Niña to occur
for the third year in a row.
About 75 percent of the Missouri River Basin is currently in some degree of drought and is likely to continue
.
The USDA report on grain shipments shows that barge freight rates have fallen
over the past week.
Soybean shipments in St.
Louis cost $72.
58 per tonne in the week ended Oct.
18, down from $105.
85 a week ago but still 130 percent
higher than a year earlier.

The pace of export sales has been affected

US net soybean sales for 2022/23 (September-August) were 1.
026 million mt in the week ended Oct.
20, down from 2.
336 million mt
a week ago, the USDA's weekly export sales report showed.
Among them, sales to China were about 1.
116 million tons, down from 1.
976 million tons last week and similar
to 1.
081 million tons in the same period last year.

So far in 2022/23, total U.
S.
soybean export sales, including shipped and unloaded sales, were 31.
55 million mt, up 4.
7% year-on-year, compared with a 5.
0%
year-on-year increase the previous week.
Among them, the total sales to China were about 17.
7452 million tons, an increase of 10.
6% year-on-year, compared with an increase of 11.
1%
year-on-year in the previous week.

The USDA expects U.
S.
soybean exports in 2022/23 to be 55.
66 million mt, 5.
23%
lower than in 2012/22.
In contrast, US soybean exports in 2021/22 decreased by 4.
77%
year-on-year.

China continues to buy U.
S.
soybeans, but its sustainability is in doubt

U.
S.
private exporters reported new soybean sales of 324,000 mt on Friday (28th), which will be reflected
in next Thursday's report.
No daily export sales report had been released for several days in a row
.
Friday's report showed sales of 126,000 mt of soybeans to China and 198,000 mt to Spain, both of which are being harvested in 2022/23
.

Chinese customs data reported that soybean imports rose to 7.
72 million mt in September, up 7.
7% month-on-month and 12% year-on-year, reversing the decline of the past few months as domestic soybean meal demand picked up
.
The year-on-year increase in September was mainly due to a year-on-year surge
in soybean imports from the United States.
China imported 1.
15 million mt of U.
S.
soybeans in September, up 579%
from 169,439 mt in September 2021.
Soybean imports from Brazil slipped to 5.
58 million mt in September, down from 5.
936 million mt
in September last year.

China's soybean imports in the first nine months of the year were 69.
04 million mt, 6.
6% lower than a year earlier, as crushing margins and high imported soybean prices for most of the year affected Chinese buyers' sourcing interest
.
However, recently, the price of domestic pork has risen, the profit of breeding has rebounded, and the demand for soybean meal has increased
accordingly.
The need to rebuild soybean stocks has grown as the need to rebuild soybean stocks has
risen as a result of low soybean orders from China and export delays caused by the Mississippi River incident, which has tightened imported soybean inventories at domestic oil mills.

Despite China's purchases of U.
S.
soybeans, U.
S.
analysts remain skeptical about the sustainability of demand
.
Terry Rayleigh, of several futures internationals, said the narrative of poor export sales seems to have changed
due to blocked barge traffic on the Mississippi River.
International traders are reluctant to line up to buy U.
S.
soybeans because of uncertainty
about when the goods will arrive.
Some analysts believe that if low water levels in the Mississippi River continue to hamper transportation, China could source more soybeans
from Brazil and Argentina during the peak U.
S.
export season.

Drought in Argentina could prompt farmers to convert more corn land to soybeans

Industry experts said timely rains on Wednesday in Argentina's main agricultural producing regions helped alleviate
drought-plagued farmland.
As Argentina's soybean planting is about to begin, rains are helping to boost production prospects
.
Argentina's National Meteorological Service said some areas received as much as 100 millimetres of precipitation, with most of the most important farmlands experiencing at least 30 millimetres of precipitation
.
Christian Russo, an analyst at the Rosario Grain Exchange, said the rains came too late for most corn and wheat crops, but were timely for soybeans, and some arable land intended to grow corn will now be planted with soybeans
.
The rains will certainly help start
soybean planting.
But he warned that there is still not enough rain in many places
.

With the end of the preferential exchange rate policy at the end of September, the pace of soybean sales by farmers has slowed
significantly.
The lower soybean crush in Argentina led to a lower supply of products, and export quotations for soybean meal and soybean oil were higher than those from Brazil
.
From January to September this year, Argentina's soybean crush was 30 million tons, down 11% year-on-year, of which soybean meal and soybean oil production were 21.
33 million tons and 4.
57 million tons, down 12% and 30.
4%
year-on-year, respectively.

Brazil has uneven rain and dew, with little rain in the southernmost part

Consulting firm Safras & Mercado said Brazil's soybean planting progress in 2022/23 was 32.
4 percent as of Oct.
21, compared to 35.
8 percent
in the same period last year.
Although planting was delayed, it was still ahead of the five-year average of 25.
8 per cent
.
Safras expects Brazilian soybean production to reach a record 151.
5 million mt in 2022/23, up 20.
3%
from the previous year.
The sown area will reach a record 42.
88 million hectares, up 2.
6% from 41.
8 million hectares last year, and yields will increase to 3,550 kg per hectare, up 17.
3%
year-on-year.

With La Niña weather visiting for the third year in a row, the market focus is on southern Brazil, which has been ravaged by drought for the past two years
.
Brazil's National Meteorological Agency (INMET) said on Friday that rain is expected to be lower than normal in southern Brazil this year, especially in Rio Grande do Sul, which will lead to lower soil moisture and detrimental
to crop growth.
According to INMET's November rainfall forecast, some areas of Rio Grad do Sul could receive between 75 and 150 mm lower than normal in November (see Figure 1 below).

As can also be seen from the map, rainfall south of the Amazon River will be higher than normal in November, including Matopiba (four states), northeast of Mato Grosso, Goiás, the Federal District, Minas Goias and other regions, where rainfall may be up to 200 mm
higher than normal.
This benefits local crops such as soybeans, first corn and cotton
.

Canola production in Canada and Europe is expected to increase year-on-year

Agriculture and Agri-Food Canada (AAFC) kept canola supply and demand unchanged in its October supply and demand report
.
Canadian canola production is expected to be 19.
1 million mt in 2022/23, up 38.
8 per cent from the previous year, as yields are expected to reach 2.
23 mt/ha, well above the 1.
54 mt/ha
cut due to drought in the previous year, according to satellite imagery.
Exports are expected to be 9.
3 million mt, up 77%
year-on-year.
Domestic crushing is expected to be 10 million tonnes, up from 8.
6 million mt
in the previous year.
Oilseed ending stocks are unchanged at 500,000 mt, but down from 875,000 mt in 2021/22 and 2.
131 million mt
below the five-year average.
Oilseed stocks in 2022/23 were expected to be 3%, well below 6% in the previous year and 8.
3%
in 2020/21.
AAFC expects Canadian canola prices to average C$880/mt in 2022/23, down from a record C$1,075/mt the previous year, but will remain the second-highest on record, with a five-year average of $
556.

The European Commission's October supply and demand forecast, released this week, showed that EU canola production estimates for 2022/23 were raised to 19.
56 million mt, 300,000 mt higher than the previous month, 14.
7% higher than the previous year's 17.
05 million mt, and also a five-year high
.
EU canola imports are expected at 4.
7 million mt in 2022/23, down from 5.
57 million mt
in the previous year.

Meanwhile, the EU's sunflower seed production forecast for 2022/23 has been revised down by 300,000 mt to 10.
03 million mt, down from 10.
35 million mt
in the previous year.
Sunflower seed imports are expected to be 1.
2 million mt, up from 1.
15 million mt
in the previous year.
Total EU oilseeds (including rapeseed, sunflower and soybeans) in 2022/23 are expected to be 32.
16 million mt, up from 30.
05 million mt
in the previous year.
Imports are expected to be 19 million mt, down from 21.
43 million mt
in the previous year.

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