A reduced forecast for world oilseeds output injected a bullish element into the market during August, but uncertainties around the development of demand amid the continuing pandemic, moves in the crude oil price and the weather contributed to a choppy market.

In its Aug. 12 World Agricultural Supply and Demand Estimates report, the US Department of Agriculture (USDA) projected total global oilseeds production in 2021-22 at 629.52 million tonnes, down from 635.41 million forecast a month earlier. The USDA put 2021-22 world soybean production at 383.63 million tonnes, down from the previous forecast of 385.22 million. US soybean output was cut to 118.08 million tonnes from 119.88 million. Forecast production in Argentina was unchanged at 52 million tonnes, as was that of Brazil at 144 million.

“Foreign oilseed production is reduced 3.6 million tonnes to 501.4 million, reflecting lower canola production for Canada and sunflowerseed for Russia,” the USDA said. “Partly offsetting that is higher Ukrainian sunflowerseed.”

Canada’s canola crop is lowered 4.2 million tonnes to 16 million on drought in the Canadian Prairies, the USDA said. Russian sunflowerseed production is lowered 1 million tonnes to 15.5 million as pockets of dryness and extreme heat in key regions lower overall crop prospects. However, the USDA had raised its forecast for Ukrainian sunflowerseed output on a wet spring, followed by “beneficial rains during June and July in southern Ukraine.”

The USDA’s forecasts triggered a short-lived rally. By Aug. 19, the British company United Oilseeds was reporting falls in the European MATIF rapeseed market, as well as the US soy complex and China’s Dalian soybean market and noted concern over Chinese demand for soybeans and wider Asian demand for vegetable oil.

“There is concern about food demand due to travel restrictions and lockdowns due to virus spread,” United Oilseeds said. “China’s feed and crush margins are also lower, which could limit imports.”

United Oilseeds also noted declines in crude oil on concerns over the effect of the resurgent pandemic on demand and a stronger dollar.

“EU rapeseed supplies will stay tight until Australian seed arrives in January/February 2022 or Canadian canola comes into mainland Europe for biofuel use,” United Oilseeds said. “However, Canadian canola will be expensive.”

In contrast, the International Grains Council (IGC) in its July 29 Grain Market Report reported a rise of 6% in its soybean price index from the previous month “stemming from gains at all origins, linked to supportive fundamentals and movements in other markets for oilseeds and products.”

Chicago soybean futures advanced by 3% on the month in what IGC called “two-sided trade … largely shaped by a changeable Midwest weather backdrop and movements in markets for other oilseeds and vegetable oils.”

Amid firmer US futures, export quotations at South American origins advanced solidly, the IGC said.

“With logistical difficulties navigating the Parana River remaining a key factor, export premiums in Argentina moved higher,” the IGC said.

The Council also reported “support from reports that Chinese processors purchased a number of competitively priced cargoes for dispatch from southern ports. At $538 fob Up River, export values rose by 7% m/m.”

The IGC said quotations also rallied in Brazil, rising by 7% to $557 fob, despite a “somewhat disappointing export pace, buoyed by broad-based strength in oilseeds and products.”

For rapeseed, the IGC said that in a two-sided volatile market, ICE canola nearby futures in Canada rose by 14% m/m, underpinned by ongoing crop worries due to sustained hot, dry weather and tight old crop supplies.

“At $775 (Vancouver), fob values were up by 16% m/m,” the IGC said.

Australian export prices rose by $31 to $578 fob (Kwinana), with expectations for a bumper 2021-22 harvest, IGC said.