Oilseed markets are likely to remain under pressure for the rest of the season, with soybean production set to rise considerably in both North and South America.
This week, ex-farm oilseed rape was quoted at £222/t – up £4 due to currency factors and frost concerns in the USA.
But figures presented by senior analysts Jack Watts at this week’s HGCA outlook conference in London painted a more bearish picture, with global soybean production set to rise from 220m tonnes last season to about 243m tonnes in 2009/10, fuelled by greater plantings in Brazil and Argentina.
With the USDA revising its crop estimates up again in September to a record 88m tonnes, the world market was looking at stocks rebuilding to well over 50m tonnes, compared with less than 40m tonnes last season, despite a recovery in oilseed use for bio-fuel production.
The increase in soybean stocks would significantly outweigh a slight reduction in global rapeseed stocks. This was one of the factors behind a 15% drop in the Chicago futures price since June.
There was still a degree of uncertainty, added Mr Watts, as much of the production increase was attributed to extra soybeans in Argentina. With planting just getting under way and with political instability rife, this was subject to change.
* For a comment from the HCGA conference, see Phil Clarke’s Business Blog