The oilseeds market around the world has been driven by varying crop outlooks as traders and analysts respond to the weather. The U.S. soybean crop is set to be big, but despite a European rapeseed crop that looks in good condition, the rapeseed market may be tight over the coming year.

Britain’s Agricultural and Horticultural Development Board (AHDB) reported on July 17 that oilseeds prices had surged due to weather concerns and fund repositioning.

“The release of the USDA’s latest estimates then accelerated the fall in prices, which had begun to move lower,” the AHDB said in the report. “Chicago soybean prices declined to a greater extent than Paris rapeseed futures due to currency movements.”

The AHDB noted that the July USDA estimated for 2016-17 U.S. soybean closing stocks was revised “1.09 million tonnes lower from June’s estimates to 11.17 million tonnes (below the average expectation of 11.7 million tonnes according to a pre-report Reuters’ poll).”

“This was due to an increase in forecast 2016-17 US soybean exports to 57.15 million tonnes (from 55.79 million tonnes in June),” the report said. “As of July 6, total U.S. soybean export commitments stood at 59.95 million tonnes, which suggests that the USDA expects to see some cancellations. Regardless of the 2016-17 closing stocks estimate being below expectations, U.S. soybean stocks are still forecast at comfortable levels (the fifth highest on record).”

AHDB was slightly skeptical about the USDA’s 2017-18 soybean production forecast of 115.94 million tonnes, higher than the average estimate of 115.5 million in a pre-report Reuters’ poll.

“However, up until August, the USDA uses a trend yield for soybeans and so this will not reflect this season’s growing conditions,” the AHDB said. “News from across the continent suggests that the European rapeseed crop is looking relatively good despite initial fears over unfavorable weather conditions in some areas. Around half of the French rapeseed crop had been harvested by July 13 and initial yield results were better than expected.”

It also reported that German farmers have started to harvest a rapeseed crop that’s expected to be bigger than last year.

“The Polish rapeseed harvest is likely to start a little later than usual, but output is expected 31% higher year on year, at 2.9 million tonnes, according to analysts Sparks Polka,” the report said. “In Britain, some rapeseed has been cut in the South of England with anecdotal reports of early yields looking better than those in 2016.”

The International Grains Council (IGC) said in its June Grain Market Review (GMR) that average soybean values retreated by 3% since its May GMR, under pressure from plentiful global supplies, including prospects for another big crop in the United States.

“However, movements in prices were sometimes two sided, partly on changing weather outlooks,” the IGC said. “In the U.S., CME futures posted losses of up to 4% m/m as supply-side fundamentals weighed. The market weakened significantly into early June on generally beneficial Midwest weather and talk that China might delay or cancel some purchases amid depressed processing margins. Ideas of a switch of some intended maize acreage to soybeans added to the negative tone at times. Thereafter, technical activity provided a degree of support, as did news of stronger export interest and gains in external markets. More recently, however, extended forecasts for hot, dry conditions led futures higher, trimming m/m falls.”

U.S. soybean conditions continue to improve, with 67% of the crop rated good to excellent as of June 18, Rabobank reported in its Agri-Commodities Monthly Report.

“After a slow start to the sales program, Brazilian farmers have now reportedly sold approximately 65% of soybeans as a 7% decline in the real against the U.S. dollar since May 15 makes prices more attractive,” the bank said. “Our CBOT price forecast has been lowered month on month, reflecting the favorable start to the U.S. growing season and plentiful supply from South America.”

Hot and dry weather has triggered concerns over Canada’s canola (rapeseed) crop. Dr. Amandeep Kaur Purewal, senior analyst at Britain’s AHDB Market Intelligence, reported on the potential effects.

“The main canola (rapeseed)-producing provinces of Saskatchewan and Alberta (which on average account for 54% and 31% of total Canadian canola output, respectively) have had below average rainfall,” she said. “For canola, especially, there are fears that the heat will limit the flowering period for the crop, which in turn could be detrimental for yields.”

Canadian canola production may not be as large as initially expected, she said.

“If we couple this with drought conditions in Australia, another important canola exporter, and the relatively low global closing stock levels in 2016-17, the global rapeseed market could see another tight supply year in 2017-18,” Purewal said.