Political uncertainty hangs over the market. 
Oilseeds markets have been firm despite record supplies. There is strong demand, although political uncertainty, in particular around the relationship between the U.S. and China, means that trade flows may change.

“Global soybean markets were marginally firmer in October, the IGC GOI sub index up by 3% m/m, tied to gains in the U.S. and Brazil,” the IGC said in its Grain Market Report. “Nearby U.S. CME futures advanced by around 7% m/m as strengthening international demand and firmer vegetable oil markets more than offset underlying pressure from prospects for a record U.S. crop.

“Strength in Chicago futures also underpinned in Brazil, as did minor concerns about seeding delays in southern areas, but the market was weighed by the quick pace of fieldwork, especially in the state of Mato Grosso.”

The IGC also reported gains of up to 10% on the month in ICE canola futures, reaching the highest since mid-June.

“Support came from weather-related crop concerns in Western Canada, while strength in vegetable oil markets added to the positive tone at times,” it said.

In its Oil Crops Outlook, the USDA’s Economic Research Service (ERS) considered export origins.

“The incipient torrent of U.S. soybean exports in 2016-17 will squeeze demand prospects for competing export origins,” the ERS said, explaining that the USDA this month lowered its forecast for Argentine soybean exports by 400,000 tonnes to 9.25 million. “A higher level of soybean stocks in Argentina would be supported as a consequence. The abundance of U.S. supplies this year may encourage processors throughout the world to favor imports of soybeans. For many countries, domestic output of soybean meal is then likely to expand at the expense of meal imports.”

It gave Mexico as an example. Its soybean meal sales commitments from its dominant supplier, the U.S., are down by 24% on the year, while its soybean purchases are at an all-time high.

“For other countries, soybean meal demand may be constrained by a greater availability of alternative protein meals,” the ERS said. Forecast 2016-17 E.U. soybean meal imports have been cut by 200,000 tonnes this month to 20.95 million.

“E.U. consumption gains in soybean meal will be limited by additional imports of sunflowerseed meal from Ukraine and Russia,” it said.

Chicago soybean futures contract (first contract forward) No. 2 yellow and par
Source: World Bank
In the U.K., industry body AHDB examined how the election of Donald Trump as U.S. president might affect the soybean market, particularly in the light of attacks by the president-elect on China, the United States’ biggest customer for soybeans.

“China is in fact an important trade partner to the U.S., from an agricultural perspective,” the AHDB said. “Indeed, last season 57% of the soybeans exported by the U.S. went to China. Depending on how the relationship unfolds, we could potentially see China switching origins, for example, to South America. The implication of this would be U.S. soybeans would be looking for homes. From an E.U perspective, this would place increased pressure on the GM authorization process. Also, for the U.K. it would add competition for soybean supplies from South America.”

From China, the USDA attaché forecast record soybean imports.

“As a result of a recovery in Chinese swine production, tempered growth in the overall poultry sector, and the expected higher domestic demand for industry feed and protein meal, China’s soybean imports are forecast to hit a record of 86 million tonnes in 2016-17,” the report said. “Forecast imports are up from the 83.2-million-tonne level in 2015-16. However, the growth rate of soybean imports slowed due to a forecast recovery in domestic soybean production and China’s sale of oilseed and oilseed product reserves (soybeans and rapeseed oil).”

In Argentina, the USDA reported that the government has announced it will delay a previously planned reduction of soybean export taxes until 2018 while implementing a new plan to bolster soybean production in the northern part of the country. The attaché in Argentina reported a wide range of views on the effect on soybean plantings.

The USDA attaché in Brazil has put 2016-17 soybean production at a record 101 million tonnes, with an export forecast of 57 million and a domestic crush of 41 million tonnes, to meet new biodiesel mandates set by the government.

The report said plantings were progressing fast.

“Producers are expected to slightly increase planted area compared to last year, but many are still concerned about the high cost of production, higher interest rates, difficulty accessing credit lines, and financial difficulties at the farm as a result of last year’s losses,” it said.