by Chris Lyddon
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The oilseeds market this spring and summer has been all about the weather, with world production estimates being revised down as it becomes clear just how much dry weather in Europe through April and May adversely affected the developing rapeseed crop.

In its June World Agricultural Supply and Demand Estimates report, the U.S. Department of Agriculture (USDA) cut 2.3 million tonnes from its estimate for world oilseed production for 2011-12, bringing it down to 456.89 million tonnes, compared with 450.57 million tonnes the year before.

The USDA reduced its estimate for the E.U.’s rapeseed production by 1.2 million tonnes to 18.8 million “mainly due to lower yields resulting from dry conditions in April and May in major producing areas of France and Germany.”

For Canada, reduced planted area, “resulting from excessive moisture this spring,” meant a cut in estimated rapeseed production of 500,000 tonnes to 13 million.

China’s soybean production is also reduced 500,000 tonnes to 14.3 million, “reflecting lower area as producers shifted to corn.” The report also noted increased sunflower seed production for Russia and reduced cottonseed production for Australia, Pakistan and the United States. Brazil’s 2010-11 soybean production is increased 1.5 million tonnes to a record 74.5 million, “reflecting yield and production increases reported in the most recent government survey.”

A recent attaché report underlined the growth in China’s demand for oilseeds, driven by increasing demand for vegetable oils and animal products, in turn driven by increasing affluence and changing dietary patterns. It forecast 2011-12 soybean imports into China at 58 million tonnes, 3.5 million more than estimated imports in 2010-11. At the same time, China’s 2011-12 soybean production is forecast at 14.4 million tonnes, down from last year’s estimated 15.2 million. Rapeseed production is forecast at an unchanged 12.8 million tonnes.

Nearby MATIF (Marché à Terme International de France) rapeseed touched a high of €494 a tonne on May 27, coming down to €459 by June 17. Traders warned against a complacent assumption that a bounce is certain. Even though biofuels mandates have leant a bullish tone to the market, the weather has improved in growing areas and soy area is up.

For the U.S., the USDA’s figure for oilseed production in 2011-12 is little changed at 98.68 million tonnes, compared with the figure it produced a month ago of 98.99 million tonnes. The 2010-11 crop was 100.38 million tonnes. “Although adverse weather has slowed soybean planting progress this year, area and production estimates are unchanged with several weeks remaining in the planting season,” the report said. “Higher beginning stocks reflect a lower export projection for 2010-11.”

U.S. soybean exports for 2010-11 are reduced 10 million bushels (272,000 tonnes) to 1.54 billion bushels (42 million tonnes), “reflecting the export pace to date for the marketing year and reduced global import demand, led mainly by lower projected imports for China.”

The USDA has also reduced its figure for U.S. soybean exports for 2011-12 by 20 million bushels (544,000 tonnes) to 1.52 billion (41 million tonnes), “reflecting increased competition from South America resulting from an increase in the recently harvested Brazilian soybean crop. Other changes for 2010-11 include reduced soybean oil used for biodiesel production, reduced projected food use of soybean oil, and lower soybean oil exports, all resulting in increased ending stocks for 2010-11 and 2011-12,” it said.

Indonesian President Susilo Bambang Yudhoyono signed Indonesia’s forest moratorium into law on May 20. A report from the USDA attaché in Indonesia said, “the Indonesian Palm Oil Producers Association predicts that the forest moratorium would further slow palm oil’s planted area expansion from the 2007-10 four-year average of 350,000 hectares to less than 200,000 hectares per year over the next two years."