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Global oilseed market: South American production continues to lower, soybean prices continue to rise

 Last Update: 2022-03-03
 Source: Internet
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Foreign media, February 13 news: Global oilseed prices continued to risein the week ended February 11, 2022 , mainly because South American soybean production forecasts continued to decline, prompting buyers such as China to turn to U.
S.
soybeans and boosting U.
S.
soybean export prospects .

March 2022 soybean futures on the Chicago Board of Trade (CBOT) settled at around 1,583 cents per bush on Friday, up 29.
5 cents, or 1.
90%, from a week ago
.
U.
S.
Gulf No.
1 spot soybeans were quoted at $16.
955 a bushel ($623.
0 a tonne), up 38 cents, or 2.
29%, from last week
.
May 2022 rapeseed futures on the Euronext exchange closed at around €691.
50/tonne, down €5 or 0.
7% from a week earlier
.
The May rapeseed futures on the Intercontinental Exchange (ICE) closed at about C$1,000.
60 per ton, down C$1.
4 or 0.
1% from a week ago; the FOB spot price of Argentine Upper River soybeans was US$645 (including 33% export tax), It was up $11 or 1.
74% from a week ago
.
The March 2022 soybean futures on the Dalian Commodity Exchange closed at about 6,339 yuan/ton, up 93 yuan or 1.
5% from before the Spring Festival
.
On Friday, the U.
S.
dollar index closed at 96.
03, up 0.
6% from a week earlier
.

　　Global inflationary pressures intensify, central bank interest rate hike drums are intensive

　　First, briefly review the recent trends in global financial markets
.
U.
S.
consumer prices rose 7.
5% year-on-year in January, the highest level since February 1982, putting more pressure on the Federal Reserve to aggressively raise interest rates
.
Goldman Sachs Group predicts that the Fed may raise interest rates seven times this year
.
Growing global demand for goods and supply chain bottlenecks pushed U.
S.
goods inflation to its highest level in 40 years in January
.
Other central banks around the world are also actively raising interest rates.
Among them, the Brazilian central bank has raised interest rates eight times in less than a year, and the Brazilian inflation rate will reach 10.
06% in 2021
.
Russia's central bank has raised interest rates by 100 basis points for the third time in less than a year, and Poland's borrowing rate has risen to its highest level since 2013
.
Inflation in Israel also exceeded the government's target, potentially leading to a more aggressive rate hike by the country's central bank
.

　　Higher inflation expectations have a dual impact on commodity markets
.
On the one hand, persistently high inflation pressure may lead to hedge funds flocking to the commodity market as hard currency to hedge against inflation; The pace of economic growth is likely to slow, which will lead to a reversal of the funds that have supported commodities over the past two years
.

　　At the same time, farmers may improve supply prospects by expanding plantings in 2022/23 due to high crop prices; however, high costs of production inputs such as fertilizers and fuels and supply chain crises may lead farmers to reduce inputs, affecting yield prospects
.

　　South American soybean production continues to decline

　　The size of South American soybean production remains in focus this week, with soybean crops in Argentina, Paraguay and southern Brazil all severely damaged by hot and dry weather this year, while early soybean harvests in central and northern Brazil have been affected by excessive rainfall, prompting In its February supply and demand report, the U.
S.
Department of Agriculture lowered its 2021/22 soybean production forecast for Brazil to 134 million tons from its January forecast of 139 million, and Argentina to 45 million from 46.
5 million
.
Paraguay soybean production is lowered to 6.
3 million from 8.
5 million
.

　　However, the USDA's downward revision to South American soybean production was relatively conservative
.
Recently, a number of private institutions have lowered the expected value of Brazil's soybean production to less than 130 million tons, and the lowest is only 125 million tons
.
Brazil's state-owned Commodity Supply Corporation (CONAB) lowered Brazil's soybean production to 125.
477 million tons a day after the U.
S.
Department of Agriculture released its supply and demand report, a sharp drop of 15 million tons from its January forecast and about 10 percent below the previous year's record production.
9%
.
The Buenos Aires Grain Exchange lowered Argentina's soybean production to 42 million tons, down 2 million from an earlier forecast and down from 43.
1 million a year earlier
.
Privately held AgResource estimates Argentina's soybean production at 41 million tons, with further downward revisions possible
.
Paraguay's agriculture minister on Friday predicted the country's soybean production could halve from a year earlier to just 5 million tonnes
.
The sharply lower forecast for South American soybean production has prompted buyers such as China to turn to U.
S.
soybeans
.

　　The U.
S.
Department of Agriculture lowered its 2021/22 soybean export forecast this month by 3.
5 million tons to 90.
5 million due to reduced soybean supplies; Paraguay soybean exports were lowered 1.
1 million tons to 4.
15 million tons; 10,000 tons, to 3.
75 million tons
.
The U.
S.
soybean export forecast, however, remained unchanged at 55.
79 million tons
.

　　U.
S.
sales of 3.
07 million tons of soybeans to China and unknown destinations since end of January

　　Since the end of January, Chinese buyers have re-entered the market for U.
S.
soybeans as the private sector began lowering forecasts for Brazilian soybean production
.
From Jan.
28 to Feb.
11, U.
S.
exporters reported sales of 897,000 tons of soybeans to China, of which 66,000 tons were delivered in 2021/22 and the remainder in 2022/23; in addition to unknown destinations 2,173,200 tons were sold, most of which were for delivery in 2021/22, and 475,000 tons were soybeans for 2022/23
.

　　China's accelerated purchase of U.
S.
soybeans also coincides with the end of the first phase of the Sino-U.
S.
trade deal
.
Based on the Phase 1 agreement signed by China and the United States in January 2020, China has committed to purchase $80.
1 billion in U.
S.
agricultural products over a two-year period from January 2020 to December 2021
.
According to a report released by the Peterson Institute on February 8, China's actual purchases are equivalent to 83% of the promised target
.
Among them, the soybean purchase amount is equivalent to 66% of the purchase target
.

　　USDA lowers annual forecast for Chinese soybean imports

　　The U.
S.
Department of Agriculture’s weekly export sales report showed net U.
S.
soybean sales for 2021/22 were 1.
6 million tons in the week ended Feb.
3, up 46% from the previous week and 81% above the four-week average
.
So far this year, U.
S.
soybean export sales totaled 46.
83 million tons, down 20.
9% from the same period last year, of which total soybean sales to China were 25.
7 million tons, down 28.
2% year-on-year
.

　　Although China has recently accelerated its purchases of U.
S.
soybeans, the U.
S.
Department of Agriculture lowered China's soybean imports and domestic crush by 3 million tons in its February report, reflecting a slowdown in China's domestic demand for soybean meal
.
The U.
S.
Department of Agriculture said in its oilseed outlook report that as China's economic growth slows, domestic meat demand and production are also affected, while the livestock industry relies mainly on soybean meal for feed demand
.
The pace of soybean crushing has slowed as soybean crushing profits have declined or even lost money, resulting in a slower pace of soybean imports between October 2021 and January 2022, prompting the USDA to lower its China soybean import forecast to 9,700 this month.
10,000 tons, down 2.
8% from 99.
76 million tons in the previous year
.

Oilseed Prices Soybeans China Buys U.
S.
Exports

　　Global inflationary pressures intensify, central bank interest rate hike drums are intensive

　　South American soybean production continues to decline

　　U.
S.
sales of 3.
07 million tons of soybeans to China and unknown destinations since end of January

　　USDA lowers annual forecast for Chinese soybean imports

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