Recent Chinese purchases of US soya beans have offered the market some support at a time when CBOT soya beans are under pressure over concerns that US/China relations may take a turn for the worse.
This was how Will Ringrose, ADM Agriculture’s head of oilseeds, summarised the OSR market in his latest report on this sector.
Ringrose was commenting after China bought 715,000t of US beans on Wednesday (22 July), comprising 66,000t of old crop and the balance for 2020/21 crop. A further 211,300t was sold to an unknown destination.
“Weather in the US is becoming more favourable for the next seven to 10 days,” said Ringrose. “Soya bean crop ratings improved 1% this week to 69% good/excellent, falling in line with trade expectations. Yield potential of 49.8 bushels/acre looks on track for now.
“Crude oil prices hit a four-month high this week, achieving levels not seen since the Saudi-Russia break-up in March. The promising news of a new vaccine and the EU stimulus package gave the market hope that demand may return to ‘normal’.”
Meanwhile, vegetable oil prices remain firm. Palm oil is trading close to contract highs and is now in ‘overbought’ territory. Malaysian palm futures have risen 12% on nearby positions since 10 July.
“Demand is returning from some key importing countries and there are concerns over supply issues, especially with reduced labour forces in some Malaysian plantations,” said Ringrose.
“In Canada, crop conditions across the prairies remain favourable, with Manitoba receiving rain in recent days. Crop estimates are starting to rise for this season, some pegging production at 20 Mt compared with the current government estimate of 18.87 Mt.
“Matif rapeseed remains within a €5 trading range. Harvest in Europe is progressing, but is still behind normal and yields remain variable.
“Sterling’s volatility continues on the back of the EU recovery deal and budget report. UK farm prices are still trading at season highs, supported by the weakening of the pound over the past few days,” concluded Ringrose.