Global oilseed market: tight supply, speculative capital speculation, soaring oilseed prices

 

On Friday, the Chicago Board of Trade (CBOT) July soybeans closed at 1,516 cents/po, up 93.
5 cents or 6.
57% from a week ago.
The average spot price of Meiwan No.
1 yellow soybeans was US$16.
0725 per cat, up 114 cents or 7.
63% from a week ago.
The Euronext exchange's August 2021 rapeseed futures closed at approximately 501.
25 euros/ton, an increase of 21.
75 euros or 4.
54% from a week ago.
The Intercontinental Exchange (ICE) July rapeseed futures reported approximately 824.
20 Canadian dollars/ton, an increase of 54.
30 Canadian dollars or 7.
05% from a week ago; the FOB spot price of soybeans in the Shanghe region of Argentina was 556 US dollars (including 33% export tax), compared with It rose by $32 a week ago.
The Shanghe spot price of Argentine soybean meal was US$445.
66 per ton, an increase of US$25.
25 or 6.
01% from a week ago.
The Dalian Commodity Exchange reported that soybeans closed at 5,978 yuan/ton in September 2021, an increase of 68 yuan or 1.
15% from a week ago.

 

　　On Friday, the US dollar index closed at 90.
83 points, down 0.
8% from a week ago.
This is also the third consecutive week of decline.

 

　　Re-inflation trading attracts hot money into the commodity market, speculation

 

　　The bulk commodity market surged across the board in the past week, and this is also the second consecutive week of rising across the board.
Among them, copper rose 4%, sugar rose 1.
9%, cotton rose 4.
4%, palm oil rose 5.
7%; rapeseed rose 7.
1%, soybean oil rose 8.
4%, corn rose 10.
2%, and soft red winter wheat rose 8.
7%.
The depreciation of the U.
S.
dollar and re-inflationary pressures are attracting hot money to flow into the commodity markets including soybeans, contributing to the increase in commodity prices.
Similar reinflation transactions have occurred in previous years, but the difference this year is that due to the uncontrolled fiscal stimulus measures of central banks, especially the Federal Reserve, injecting unusually high liquidity into the market.
The characteristics of futures trading also make the current market enter a stage of self-reinforcing, because short positions with insufficient margins are forced to close out due to the increase in futures prices, which promotes futures prices to rise further and attracts more hot money to do long.

 

　　Take soybeans as an example.
Last week, the net long of speculative funds on Chicago soybean futures and options increased by 30,000 lots, which was the highest single-week increase in holdings since September last year.
The net long position was 173,000 lots, the highest value since the beginning of January.

 

　　From a macro perspective, the strong economic growth of China and the United States and the high consumer price index indicate that the inflationary pressure that the market has been worried about is emerging.
The Federal Reserve has repeatedly reiterated its low interest rate policy, which means that monetary easing policy will continue.
The global green economy transformation and the green energy revolution have also injected new impetus into the fields of bioenergy and electrification.
At the same time, there are more uncertainties in the supply of bulk commodities, which has triggered a large amount of hot money into the bulk commodity market to do more, and bulk commodities are regarded as hard currencies to hedge against inflationary pressures and oversupply of currencies.
The Fed's low interest rates and excessive currency issuance are in fact tantamount to exporting inflation to the world, which also forces more central banks to take monetary tightening measures.
On Friday, the Central Bank of Russia unexpectedly raised the key interest rate by 50 basis points to 5%, and hinted that it would tighten interest rates because the volatility of the ruble increased the risk of inflation.
The Bank of Canada also issued an inflation warning this week, speeding up the timetable for possible interest rate hikes, and reducing bond purchases from Wednesday, making it the first major economy to express its intention to reduce the level of emergency monetary stimulus.

 

　　The World Bank expects commodity prices to remain high this year

 

　　The World Bank released its semi-annual commodity report on April 20, and it is expected that global commodity prices will remain firm in 2021.
This year, energy prices are more than one-third higher than in 2020, basic metal prices will rise by 30%, and prices of bulk agricultural products will rise by nearly 14%.

 

　　U.
S.
soybean spot supply is tight, and ending stocks are only enough for 10 days

 

　　At the end of August last year, U.
S.
soybean supply could meet 48-day demand; by the end of August this year, U.
S.
soybean supply is expected to meet demand for less than 10 days.
It is really rare for the US spot supply to be so low.
This means that the production of new soybeans can not be lost, and only a high yield can avoid the depletion of soybean supply.
At the end of March, the U.
S.
Department of Agriculture estimated that the US soybean planting area will be 87.
6 million acres this year, far below the 90 million acres predicted by analysts.
This may also be a reason why the US Midwest weather risk began to be hyped early this year.

 

　　In the past week, there was a cold wave in the Midwest of the United States.
The temperature below the freezing point made farmers reluctant to go to the fields.
The low temperature also affected the emergence of just sown crops.
The meteorological agency said the temperature for the remainder of April may still be below normal, which may further slow down the planting schedule.
According to the National Crop Progress Weekly Report released by the US Department of Agriculture on Monday, as of April 18, soybean planting progress in 18 major producing states was 3%, compared with 2% in the same period last year, and the five-year average for the same period was 2%.

 

　　The pace of US soybean exports, high prices start to curb demand

 

　　The US Department of Agriculture's weekly export sales report shows that for the week ending April 15, US soybean net sales for 2020/21 were 64,300 tons, 29% lower than last week, but 25% higher than the four-week average.
The sales volume of new beans in 2021/22 was 315,300 tons.
It is worth noting that China did not buy any old American beans or new beans.
So far this year, US soybean export sales totaled 60.
83 million tons, a year-on-year increase of 60.
8%.

 

　　It is worth mentioning that in March, China imported 7.
18 million tons of soybeans from the United States, a surge of 320% over the same period last year, while China imported only 315,000 tons of soybeans from Brazil during the same period, a year-on-year decrease of 85%, because the rains in Brazil led to the soybean harvest.
And export delays.
China has purchased a large amount of US soybeans in advance, and the current domestic crushing profits are not good, especially the African swine fever epidemic may affect soybean meal demand, so China's soybean import demand in the next few months may be lower than previously expected.

 

　　South American soybean exports are expected to accelerate

 

　　In South America, Brazil announced this week that it would suspend import tariffs on soybeans and manufactured goods before the end of the year, as international commodity prices have increased domestic inflationary pressures.

 

　　Argentine government officials said on Friday that they would consider imposing export tariffs to ensure domestic supply and quell inflationary pressures.
Argentina has imposed a 33% tariff on soybean exports and a 31% tariff on soybean meal and soybean oil exports.

 

　　At present, Brazil's soybean harvest is nearing completion, and the pace of exports is accelerating.
As of April 15, Brazil's 2020/21 soybean harvest was 91% completed, slightly lower than the 92% in the same period last year.

 

　　The Brazilian National Association of Grain Exporters (ANEC) predicts that Brazil’s soybean exports in April may reach 16.
79 million tons, which is lower than the 17.
15 million tons predicted a week ago, but it is likely to be higher than the same period last year.

 

　　In Argentina, the soybean harvest has just begun, and the Rosario Grain Exchange expects that the 2020/21 Argentine soybean production will still be 45 million tons, which is consistent with the earlier forecast.