 |
The latest forecasts on Brazil’s crop have injected a bearish note. In its February World Agricultural Supply and Demand Estimates report, the U.S. Department of Agriculture (USDA) added 1 million tonnes to its prediction for this year’s Brazilian soybean crop, bringing it up to 68.5 million tonnes, compared with the 2010 crop of 69 million tonnes. However, the newsletter Oil World has reportedly predicted a record figure of 71 million tonnes.
The USDA said it had raised its figure because “timely rains in the southern producing area have raised yield prospects.”
In the WASDE report, Brazil’s rise was offset against a predicted cut of 1 million tonnes for Argentina, down to 49.5 million tonnes, a figure which compares with 2010 output of 54.5 million tonnes. “Despite widespread rains since mid-January, the extended dry period during planting and early crop development reduced yield prospects,” the USDA said.
“About two weeks ago, the situation looked very critical, with soil moisture levels considerably below average in most major growing regions,” the British Home Grown Cereals Authority commented. “The window for rain to improve crop development was closing, but late rains have reportedly redeemed the situation considerably.”
The USDA now puts total world oilseed production for 2010-11 at 441.78 million tonnes, up ever so slightly from the previous year’s total of 441.3 million.
In Europe, prices for rapeseed have risen due to strength in the world vegetable oil market. “The sharp rise in old crop values has curtailed crushing demand as a means of retaining stocks,” David Eudall, economist at the HGCA, said in an analysis of the market. Even so, he reckoned that supportive rape oil prices meant that crush margins remained profitable across Europe.
“Demand rationing is likely to continue for the remainder of the season,” he said.
Stock levels in Europe are forecast to fall below 1 million tonnes. “The key aspect of stocks is that they now account for a much smaller proportion of demand,” he said. “With biodiesel production from rape oil more than doubling over the past decade, the E.U. stocks-to-use ratio is forecast to fall to 4.1%.
“With growing conditions for the new 2011 harvest less than ideal in Central Europe, this year’s European rapeseed harvest could turn out below expectations. This could potentially result in a similar scenario in 2011-12 to the current one whereby high prices may again limit crushing demand to prevent unsustainable stock levels.”
Rapeseed plantings across Europe are forecast to decline by about 4% to 6%. “The European market will be very responsive to weather and crop condition news throughout the spring of 2011,” he said.
In the palm oil market, there has also been a more bearish tone, triggered by speculation China may cut tariffs to combat inflation. The Bloomberg news agency reported hints that China could cut import tariffs on cooking oils made from palm, soybeans and canola to 5% from 9%. Palm oil has rallied 42% in the past year, the agency said.
Europe’s struggling livestock industry is putting pressure on regulators for action on GM, a position backed by the feed compounders’ organization, FEFAC.
“Unless E.U. authorities do urgently adopt market management measures to allow imports of cheaper feed grains and the ‘technical solution’ to avoid soya trade disruptions due to low level presence of non-EU approved GMOs, many livestock farmers, especially pig holdings, will have to close down their operations since they cannot pass on higher feed costs to the consumer in the present market context,” said FEFAC President Patrick Vanden Avenne.
