The US trade war with China has had a major impact on oilseed markets in 2018, with mixed price movements the result of uncertainty from region to region, reports World Grain.
At the start of December, soyabean futures prices rose above US$9/bushel for the first time since mid-October after China and the USA announced a 90-day temporary truce on 1 December. This included news that China would agree to buy an unspecified amount of US agricultural products.
“While US values strengthened as hopes for a breakthrough in the trade dispute with China factored, FOB (free on board) quotations retreated significantly in South America,” said the International Grains Council’s (IGC) most recent Grain Market Report published on 22 November.
However, there was a weakening in southern hemisphere markets, World Grain wrote.
“In Brazil, a retreat in international buying interest weighed down amid ongoing trade discussions between the USA and China,” the IGC said. “This was despite support from currency movements and limited grower sales. This resulted in a heavy fall in basis levels – of about 50% m/m – as export quotations (Paranagua) dropped by 8%, to US$372 FOB. In Argentina, Up River offers were down by 7%, to US$360 FOB.”
World 2018/19 oilseeds production is forecast at 599.57M tonnes, down from 574.19M tonnes in 2017/18, according to the November World Agricultural Supply and Demand Estimates (WASDE) report United States Department of Agriculture (USDA).
A higher forecast for sunflowerseed production slightly offset lower production estimates for soyabeans, cottonseed, peanuts and rapeseed.
Global soyabean production for 2018/19 was estimated at 367.59M tonnes for 2018/19, down 2M tonnes from a year ago, with lower production for Argentina and the USA.
The USDA’s Economic Research Service (ERS) 13 December report lowered its global rapeseed production forecast for 2018/19 to 70.2M tonnes, with reductions in Australian and Indian crops more than offsetting a rise in EU production to 19.6M tonnes.
The ERS report also pointed to Indonesian palm oil production rising to 41.5M tonnes for 2018/19 and 39.5M tonnes in 2017/18. Rising production, coupled with lowering demand, had caused stocks in both Indonesia and Malaysia to accumulate to all-time highs.
“The government of Indonesia is addressing the low prices for domestic palm producers,” the report said. “In December, the Indonesian export tax on crude palm oil was lowered from US$50/tonne to zero – equalling the Malaysian tax rate.”