Global Oilseed Markets: Investors embrace commodities, oilseed prices rise

 

May 2022 soybean futures on the Chicago Board of Trade (CBOT) settled at around $17.
1025 a bush on Friday, up 42.
25 cents, or 2.
5%, from a week earlier
.
U.
S.
Gulf No.
1 yellow soybeans were quoted at $18.
4175 a bushel ($661.
0 a tonne), up 42.
75 cents, or 2.
38%, from last week
.
May rapeseed futures on the Euronext exchange closed at around 969.
25 euros per ton, up 31.
5 euros or 3.
4% from a week ago
.
The Intercontinental Exchange (ICE) May rapeseed closed at 1139.
40 Canadian dollars / ton, up 14.
6 Canadian dollars or 1.
3% from a week ago; the FOB spot price of Argentina's upper river soybeans was 681 US dollars (including 33% export tax), compared with a week ago.
Down $13 or 1.
87%
.
July 2022 soybean futures on the Dalian Commodity Exchange closed at around 6,238 yuan/ton, down 33 yuan or 0.
5% from a week ago
.
On Friday, the ICE U.
S.
Dollar Index closed at 98.
81, up 0.
6% from a week earlier
.

 

　　This week, international crude oil futures rose for the first time in three weeks and hit the biggest weekly gain since March 4.
Among them, the U.
S.
West Texas Intermediate (WTI) May contract closed at $120.
65 per barrel, which was higher than a week ago.
up 10.
49%
.
May Brent crude futures settled at $113.
90 a barrel, up 11.
5% from a week ago
.
International crude oil futures rose sharply, making soybean oil-based biofuels more attractive
.

 

　　pandemic, war, inflation

 

　　The first quarter of 2022 is coming to an end
.
As in the past two years, the shadow of the epidemic is lingering, and inflationary pressures remain high
.
Unlike the past two years, the Federal Reserve officially ended its two-year super quantitative easing and started its first interest rate hike cycle in three years; the sharp rise in global geopolitical conflicts may overturn the political map since World War II
.
The global geopolitical uncertainty caused by the conflict between Russia and Ukraine, as well as the hawkish stance of the Federal Reserve, have shaken the logic of the capital market for more than two years
.
U.
S.
10-year benchmark U.
S.
Treasury yields hit a three-year high of about 2.
5%.
Investors expect the Federal Reserve to raise interest rates by more than 200 basis points this year, prompting investors to flock to gold, commodities and cash.
U.
S.
stocks and bonds have emerged In a rare double play, the S&P 500 is down 5% so far this year, while the ICE U.
S.
Treasury Index is down 5.
6%
.
Investors moved $13.
2 billion into cash and $2.
1 billion into gold in the past week, according to BofA's global research team, and U.
S.
equities saw $3.
1 billion in outflows
.
Unlike previous periods of heightened geopolitical risk, this confrontation will be significantly more intense, and the negative outcomes will be more widespread and severe
.

 

　　The worst outbreak in China since 2020, the situation in Russia and Ukraine shows no signs of easing in the short term, the United States and its allies have imposed strangulation->
.
Global commodity shortages and supply chain crises have also boosted commodity prices, including food, to remain high, while the build-up of global inflationary pressure has prompted major central banks of the Federal Reserve to adopt monetary tightening policies such as interest rate hikes.
The risk of stagflation is looming over the global economy
.

 

　　Reduced South American soybean supplies prompt buyers such as China to turn to U.
S.
soybeans

 

　　Importers have turned to U.
S.
soybeans due to lower South American soybean production this year due to unfavorable weather
.
At present, 80% of the soybean harvest in Brazil is completed, and the production reduction is a foregone conclusion
.
Brazil's National Commodities Supply Corporation (CONAB) forecasts Brazil's soybean production in 2021/22 to be 122.
8 million tons, down 11% from the same period last year and the lowest since 2018/19
.
Private sector AgroConsult released a production forecast last week of less than 125 million tonnes, down 10.
6% year-on-year
.

 

　　Due to the reduction in soybean production, farmers are reluctant to sell soybeans, and the price of soybeans in Brazilian ports is high, exceeding 200 reais per bag (each bag is 60 kilograms)
.
High soybean prices in Brazil have prompted soybean importers to continue buying U.
S.
soybeans
.
Private exporters reported 240,000 tons of soybean sales to unknown destinations on Tuesday, 318,200 tons to unknown destinations on Thursday, and 132,000 tons to China on Friday, according to the USDA's one-day export sales report, 2021 /22 annual delivery
.

 

　　Customs data show that in the first two months of 2022, China imported 3.
51 million tons of soybeans from Brazil, an increase of 241% from 1.
03 million tons in the same period last year; during the same period, China imported 10.
04 million tons of soybeans from the United States, down from 11.
9 million tons in the same period last year.
16%
.
This is because Chinese buyers expected a bumper crop of Brazilian soybeans at the end of last year and put them on the market ahead of schedule.
However, dry weather from December to January caused a severe reduction in Brazilian soybean production, prompting Chinese buyers to turn to U.
S.
soybeans
.

 

　　Focus on Spring Planting and USDA Planting Intentions Report

 

　　The spring planting work in North America is about to start, and the weather and planting intentions have become the focus of the market
.
The USDA will release its Planting Intentions report on March 31
.
The current market consensus is that soybean acreage will increase, while corn acreage may decrease year-on-year
.
But we also need to be prepared for surprises, because the soybean/corn price ratio has narrowed since March, which means prices are more favorable for planting corn
.
As of the close on March 25, the price ratio of CBOT November soybean futures to December corn futures was 2.
24, slightly lower than 2.
27 a week ago, and far lower than 2.
61 a year earlier
.
The soybean-to-corn price ratio is an indicator of the profitability potential of crop planting, and close to or below 2.
5 is generally favorable for corn planting
.
For comparison, the price ratio of soybeans to corn averaged 2.
34 in January and 2.
43 in February, but the price ratio has gradually declined since March
.
Of course, the variables affecting this year's spring planting are far more than the price ratio of soybeans and corn, but also need to take into account the weather (currently the Midwest is still dry), as well as fertilizer prices and supply
.
Global fertilizer prices had risen sharply long before the Russian-Ukrainian conflict, which was detrimental to the fertilizer-intensive crop area of ​​corn
.

 

　　According to a survey by Farm Futures magazine, U.
S.
farmers are likely to plant 90.
379 million acres of corn this year, a decrease of nearly 3 million acres from a year earlier, due to high corn planting costs
.
Soybean acreage may reach 92.
208 million acres, an increase of 5 million acres from a year earlier
.
The USDA forecast at the Annual Outlook Forum in February that U.
S.
soybean plantings would be 88 million acres and corn plantings would be 92 million acres
.
The 2021 U.
S.
soybean acreage is 87.
195 million acres and corn acreage is 93.
357 million acres
.

 

　　In Canada, much of the Prairies remained dry as of February 28, with extreme drought in southern Alberta and central Saskatchewan
.
Dry weather last year caused a sharp decline in Canadian canola production, while strong demand has sent canola prices soaring, now up 44.
3% from a year earlier and up 16.
8% so far in 2022
.
A lack of soil moisture after winter means this year's crops are more vulnerable to dry weather, said Agriculture Canada meteorologists
.
Soaring energy prices, which have led to higher cost of production materials, may also limit the scale of rapeseed plantings this year, which requires high fertilizer demand
.
Statistics Canada will release its Planting Intentions report on April 26
.