Global oilseed market: Russia-Ukraine peace talks remain hopeless, and Indonesia's export ban adds fuel to the fire

 

July 2022 soybean futures on the Chicago Board of Trade (CBOT) closed at around $1,688 a bushel on Friday, up 22.
75 cents, or 1.
37%, from a week ago
.
U.
S.
Gulf No.
1 spot soybeans were quoted at $18.
215 a bushel ($669.
3 a tonne), up 19.
25 cents, or 1.
07%, from a week ago
.
On the Euronext exchange, August rapeseed futures settled at around 881.
25 euros per ton, up 21 euros or 2.
4% from a week ago
.
The July rapeseed on the Intercontinental Exchange (ICE) closed at C$1,171.
70/ton, up C$29.
2 or 2.
6% from a week ago; the FOB spot price of Argentine Upper River soybeans was US$656 (including 33% export tax), up from a week earlier Up $2/ton
.
July 2022 soybean futures on the Dalian Commodity Exchange closed at around 6,137 yuan/ton, down 56 yuan or 0.
9% from a week ago
.
The U.
S.
dollar index closed at 101.
12 on Friday, up 0.
8% from a week earlier and has gained 5.
4% so far this year
.
The yuan hit a nine-month low against the dollar in the past week, its biggest weekly drop since a 2015 devaluation
.

 

　　Inflation accelerates, economic growth slows, specter of stagflation emerges

 

　　On April 19, the International Monetary Fund (IMF) released the "World Economic Outlook" report, subtitled "War drags down global economic recovery"
.
The IMF lowered its forecast for global economic growth in 2022 by nearly 1 percentage point, the largest reduction since the global outbreak of the new crown epidemic in early 2020, as the conflict between Russia and Ukraine and the epidemic in China put pressure on world economic growth
.
The 200-page flagship report mentions Russia 124 times and China 101 times
.
The IMF also expects inflation to pick up, noting a growing risk of volatile price expectations
.
The IMF now expects global economic expansion to slow to 3.
6% in 2022, down from a 4.
4% forecast in January
.
Social unrest sparked by rising food and energy prices has engulfed countries including Sri Lanka, Egypt, Tunisia and Peru, and could turn into a broader debt crisis that threatens the fragile recovery of the world economy from the pandemic
.
A senior IMF official said that if Western countries expand sanctions on Russia due to the Russia-Ukraine conflict and energy prices rise further, they may further cut their economic growth forecasts in the future
.

 

　　In the United States, the world's largest economy, Federal Reserve Chairman Jerome Powell said on April 21 that at the next Fed policy meeting in May, the central bank will consider raising interest rates by 50 basis points and continue to raise interest rates for the rest of the year
.
Expectations of rate hikes pushed the dollar to a more than two-year high
.
Traders expect the Fed to raise rates by 50 basis points at each of the next three meetings, with a cumulative increase of nearly 250 basis points in 2022
.
The Fed's benchmark rate will rise to 2.
59% in November and 2.
98% in February, from 0.
33% now
.
The Federal Reserve is expected to announce in May that it will shrink by $9 trillion starting in June, according to Fed Governor Raul Brainard and New York Fed President John Williams, Bank of America (BofA) analysts said on Friday.
US dollar balance sheet
.
The yield on the two-year Treasury note, which is highly sensitive to changes in interest rates, rose to 2.
789% on Friday, the highest since December 2018, before falling back to 2.
713% at the close
.
The benchmark 10-year yield ended at 2.
905%, after hitting 2.
981% on Wednesday, also the highest since December 2018
.
Two-year and 10-year Treasury yields briefly inverted several times in late March and early April, and this inversion is seen as a leading indicator of a recession, often indicating a possible U.
S.
recession within one to two years
.
Deutsche Bank was the first major investment bank to predict a recession in the U.
S.
next year in early April
.
In Europe's largest economy, German officials said on Friday the government would cut its 2022 GDP growth forecast to 2.
2 percent from 3.
6 percent
.
Germany's economy is likely to shrink by nearly 2 percent this year if the conflict in Ukraine escalates and the European Union's embargo on Russian coal, oil and gas curbs power suppliers and industry, the Bundesbank said
.

 

　　Global inflationary pressures have increased, while economic growth has slowed, creating a perfect picture of the economy's "stagflation"
.
Susan Jeanette, an analyst at consulting firm Derain Inc, said that behind the stagflation is tightening, not only the tight supply of commodities, the tight labor supply, the tight logistics supply chain, but also the current major central bank's turn to tightening policies is leading to tight liquidity in the financial market , which is largely an echo of the Fed’s unbridled ultra-easy monetary policy over the past two years or so
.
Lisa Shalett, chief investment officer at Morgan Stanley Asset Management, also said higher costs, including labor, logistics, distribution, energy and other industrial commodities, posed macro headwinds
.
The slowdown in new U.
S.
orders suggests that U.
S.
economic growth is slowing, while the Russian-Ukrainian conflict raises the risk of a potential recession in Europe
.
The outbreak and containment measures in Asia are also exacerbating already strained global supply chains
.

 

　　U.
S.
soybean planting just started, lagging behind historical levels

 

　　The soybean planting work in the Midwest of the United States in 2022 has already started, but the weather has been cold and rainy recently, which has led to a very slow spring planting progress
.
The U.
S.
Department of Agriculture's weekly crop report released on Monday showed that as of April 17, U.
S.
soybean planting was 1 percent complete, 3 percent behind a year earlier and 2 percent behind the five-year average, and below analysts' forecast of 2 percent
.
The weather forecast issued by the National Oceanic and Atmospheric Administration (NOAA) shows that the weather will be rainy in the Midwest this weekend, with the heaviest rainfall in Iowa, Missouri, North Dakota and South Dakota, and a season may occur in the central United States next week.
low temperature weather
.

 

　　Upbeat outlook for U.
S.
soybean exports

 

　　U.
S.
soybean prices have also become more competitive as Brazilian soybean prices have risen for a third straight week on strong domestic crush demand due to lower soybean production in Brazil
.
U.
S.
soybean exports are currently cheaper than Brazilian soybeans for the May-August shipment
.
Market rumors that Chinese buyers bought 10 cargoes of soybeans on Wednesday, including several cargoes of US soybeans for July and August, as well as one cargo of US soybeans for February next year, and Brazilian soybeans for June and July One cargo each; China bought 6 cargoes of soybeans on Thursday
.
However, these rumors have not been confirmed by the USDA export report
.
As of April 20, the spot price of soybeans in the US Gulf region was US$675 per ton, and the CIF price of soybeans for June shipment was about US$673 per ton
.
In contrast, soybeans from Brazil's Paranagua port were quoted at $690 per ton, up 9 percent from the beginning of the month, and Argentina's Upper River region was at $671 per ton, up 7.
2 percent from the beginning of the month
.

 

　　USDA's weekly export sales report shows total U.
S.
soybean sales (both aged and new) of 1.
7 million tons for the week ended April 14, 2022, at the top end of the expected range, with 2021/22 net Sales were 460,000 tonnes and net sales in 2022/23 were 1.
24 million tonnes
.
So far in 2021/22, the total U.
S.
soybean export sales (shipped and unloaded sales) are 57.
1 million tons, a year-on-year decrease of 6.
1%, of which 29.
68 million tons are sold to China, a year-on-year decrease of 16.
7%%
.

 

　　Ukrainian oilseed area declines

 

　　As of Thursday, Ukrainian farmers had planted 2.
5 million hectares of spring crops, equivalent to 20 percent of the expected area, Ukraine's Agriculture Ministry said
.
The Ukrainian Ministry of Agriculture expects a 20 percent drop in spring plantings this year
.
Analyst agency UkrAgroConsul expects the sunflower seed acreage to fall by nearly 50 percent this year
.
Ukraine is the world's top exporter of sunflower oil, and a sharp drop in sunflower seed production will force its main buyers - India, the European Union and China - to switch to other vegetable oil supplies
.
The USDA forecasts Ukrainian sunflower oil production in 2021/22 at 5.
68 million tons, down about 4 percent year-on-year
.
Sunflower oil exports are forecast at 4.
95 million tonnes, down 6.
1% year-on-year
.

 

　　Indonesia abruptly halts palm oil exports

 

　　Chicago soybean oil futures hit an all-time high on April 22, as Indonesian President Joko Widodo announced that Indonesia would halt exports of edible oils and raw materials from April 28, adding to an already nervous global vegetable oil market.
supply concerns
.
Indonesia is the world's number one palm oil producer and exporter, exporting about 27.
3 million tonnes of palm oil annually
.
Current data from the U.
S.
Department of Agriculture shows that Indonesia's palm oil production in 2021/22 is expected to reach 44.
5 million tons, an increase of 4.
6% year-on-year
.
Exports are expected to reach 28 million tons, up 4.
2% year-on-year
.

 

　　China continues to auction state-owned soybeans, output expected to rise by more than a quarter this year

 

　　China's National Grain Exchange Center said that China will auction 500,000 tons of imported soybeans on April 29.
This will also be the fourth consecutive week that China has auctioned 500,000 tons of state reserves since April 1.
soy
.

 

　　China's Ministry of Agriculture officials said on Wednesday that China's soybean production will increase by 25.
8% in 2022, and the soybean planting area will expand by 16.
7% this year
.
The trade war since 2018 and the COVID-19 outbreak since 2020 have highlighted geopolitical risks and bottlenecks in the global supply chain, prompting China’s policy to shift to increasing domestic oilseed production and reducing import dependence
.
On December 27, 2012, the National Agriculture and Rural Affairs Bureau Director's Meeting emphasized that increasing the output of soybeans and other oil crops is a major political task that must be completed in 2022
.

 

　　Global soybean production expected to increase by 10% in 2022/23

 

　　The April monthly report released by the International Grain Council on April 21 shows that due to the downward revision of soybean production in the southern hemisphere, global soybean production in 2021/22 was slightly lowered to 349 million tons, a year-on-year decrease of 5%; soybean ending stocks were raised to 4430 10,000 tons, but still a substantial decrease of about 20% compared with the previous year
.
Global soybean exports are revised down to 155.
1 million tons, down 3% year-on-year, due to a significant slowdown in Brazil's soybean exports
.

 

　　In 2022/23, global soybean production will increase by 10% year-on-year to 382.
6 million tons due to expected increases in production in the United States, Brazil and Argentina; soybean exports will reach 165.
8 million tons, up 7% year-on-year
.
Soybean ending stocks will rise to 54 million tons
.