Oilseeds markets look well supplied, but the period we’re in now is crucial for the development of South American soybeans. Any adverse weather event in that region could make markets jittery.
“CBOT oilseed prices are expected to fall in 2014 as a result of record South American production and an easing international balance sheet,” Rabobank said in a report on the outlook for 2014. “We believe there is further downside for prices (from the futures curve) based on larger than expected supplies from South America.”
The report explained that climatic conditions until February will be critical and that weather scares might trigger short-term rallies. “However, beyond this period we expect prices to ease substantially due to record South American production,” the report said.
Canadian canola production is at record levels. The Canola Council of Canada (CCC) called news that the 2013 canola harvest reached nearly 18 million tonnes “a sign that the industry is continuing to gain momentum.”
“This is our second record-breaking canola crop in just three years,” said CCC President Patti Miller. “We’ve exceeded our previous record of 14.6 million tonnes by 23% and we have every reason to believe this upward trend will continue.”
Miller made the comments after Statistics Canada released its final 2013 grain and oilseed estimates. The final numbers peg canola production for the year at 17.96 million tonnes — significantly higher than Statistics Canada’s October estimate of 15.96 million tonnes.
This was the first canola crop to surpass the industry target of 15 million tonnes, a goal the Canola Council was aiming to reach by 2015.
The record crop was one factor in weakness in Canada’s canola market as the year neared its end. Commodity News Service Canada reported on Dec. 23 that ICE Futures Canada canola contracts had set fresh contract lows, “once again as speculative selling continued to build on itself.”
“Speculative traders are already heavily short canola and remained on the sell side on Monday,” the news service said. “Positioning against the U.S. soy market was behind some of that selling. Canada’s record large crop, bearish technical signals, the firmer Canadian dollar, and a softer tone in Chicago soybeans all added to the declines, according to participants.”
The E.U. farmers group, Copa-Cogeca, released figures for 2013-14 which confirmed that E.U. rapeseed production has returned to record levels, with a 4.2% rise on the previous year’s level.
After a Copa-Cogeca oilseeds working party assessed the market situation, its chair, Gerard Tubery, from France said, “The figures show that total E.U.-27 oilseed production reached 30.3 billion tonnes in 2013-14, which is up 4.2% on last year’s level. E.U.-27 rapeseed production is estimated to climb by 5.1% to reach 20.9 billion tonnes. Meanwhile, the sunflower crop declined slightly by 0.6% to 8.2 billion tonnes. The good E.U. crop will help to ensure a good supply of protein for the E.U. livestock sector.”
In an edition of its Market Report dated Dec. 23, the U.K.’s HGCA cited German government statistics showing that German rapeseed plantings for harvest 2014 are estimated to decline by 1.8% year on year.
“This is a smaller reduction in area than was predicted by the German oilseeds industry association, UFOP, in November (a 4% decrease in planted area was projected),” it said.
The HGCA also noted that a weaker Malaysian ringgit is providing support to palm oil prices.
“The KL Jan. 14 futures contract has recorded gains since last Wednesday,” it noted. “Furthermore, heavy rainfall in key palm areas in Malaysia have fueled output concerns.”
The HGCA also relayed the news that U.S. Senator Chuck Grassley from Iowa said he expects the $1 gallon blending credit for biodiesel production in the to be renewed in 2014. “The subsidy acts as a strong incentive to biodiesel producers, with record biodiesel production usually occurring when it is active,” HGCA said.
The National Biodiesel Board complained in a letter to lawmakers about the uncertainty created by lapses in the subsidy.
“This marks the third time in five years that this incentive will have expired,” Anne Steckel, vice president of federal affairs at the board, wrote in the letter. “The uncertainty this creates is a major reason why we are still so dependent on petroleum. It is incredibly disruptive, not just to biodiesel plants across the country but also to our bipartisan goals of creating jobs in new domestic energy industries and boosting our energy security by diversifying our fuel supplies.”
Chris Lyddon is World Grain’s European editor. He may be contacted at: email@example.com.
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