Oilseed production is set to break records, while international trade is also at higher levels than ever. Even so, a quiet turn-of-year market is jittery in the face of uncertainties over crops in South America and worries over the role in the market of key buyer China.
The most recent International Grains Council (IGC) report puts 2012-13 soybean production worldwide at a record 267 million tonnes, up from 238 million the year before. The latest figure was raised 3 million tonnes on earlier estimates because of better than anticipated U.S. yields.
“Nevertheless, as production there is still likely to decline, the 12% year-on-year rise in global output is centered on expected bumper crops in South America,” the IGC said.
A recent attaché report raised its estimate for Argentina’s soybean plantings by 100,000 hectares to 19.8 million hectares, “due to the reduction in area for sunflower seed that will now be dedicated to soybeans.
“It is possible that area could increase up to 20 million hectares or drop anywhere between 5% and 10% over the next couple of months, depending on final planted area and effects of diseases,” it said. “This year Argentine cropland is experiencing differing conditions. In the north, there is drought. In central-west Buenos Aires province (less than 10% of total soybean area), there is flooding, and in other areas conditions are good.”
The IGC’s report predicted sowings would accelerate. “Assuming a 4% rise in sowings, and much-improved productivity, output is projected to rise by one-third from the previous year’s drought-affected outturn, to 54 million tonnes,” it said.
“After initial delays due to dryness in central areas of Brazil, notably in Matto Grosso, the largest producing state, recent precipitation allowed plantings to advance, with farmers also reseeding some fields,” the IGC said. “Nevertheless, southern parts, particularly Paraná and Rio Grande do Sul, remained dry and more rains are required to aid crop development.
“Assuming that weather patterns remain favorable, and the forecast 7% expansion of plantings is realized, output in 2012-13 is tentatively projected to recover strongly, by one-fifth, to 80.5 million tonnes.”
Australia’s canola crop is expected to be lower, despite increased planting, according to a recent attaché report.
“Back-to-back record wheat crops, coupled with lower prices received by farmers at the time of last year’s rain-affected wheat harvest, encouraged growers to shift area into canola,” the report explained. “Total area planted to canola reached a record 2.37 million hectares in 2012-13, 23% higher than the previous year. However, in response to less favorable seasonal conditions, average yield in 2012-13 is estimated at only 1.2 tonnes per hectare, significantly lower than last year’s record yield of 1.75 tonnes per hectare and well below the five-year average of 1.5 tonnes per hectare.”
Total Australian production of canola seed in 2012-13 is projected to be the second largest on record at 2.7 million tonnes, down from last year’s record production of 3.2 million tonnes.
Harvest pressure from Australia was one reason behind a fall in rapeseed prices at the French MATIF exchange in December. A stronger euro against the dollar also pressured MATIF prices.
China, the world’s biggest soybean buyer, cancelled 840,000 tonnes of soybean purchases from the U.S. in one week in December, triggering a 4.2% drop in Chicago futures prices, according to a Dec. 25 report by the Bloomberg news agency. It cited the newsletter Oil World as saying that China is still dependent on U.S. supplies until March and that it would have to replace the canceled orders.
The IGC has lifted its forecast for global trade in 2012-13 (Oct./Sept.) slightly, to a record 96.8 million tonnes, up from 92.1 million the year before.
“Both the upward revision and projected year-on-year growth of 5% are due to Far East Asia,” it said. “Deliveries there are set to expand to an all-time high of 72.9 million tonnes (68.9 million), three quarters of the world total.
“This is mostly linked to a further expansion in shipments to China, seen rising by 7% year on year, to 61 million tonnes, driven by expanding demand for soybean products from both the feed and food sectors.”
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