Stable Oilseed Market Despite Global Shifts

The USDA's July WASDE Supply and Demand Report indicates that the oilseed market, including soybeans, is expected to remain stable. Lower global sunflower production will be balanced by higher canola yields, keeping oilseed prices largely unchanged.

Soybean Production Forecasts

Brazil and Argentina

• The USDA has maintained its soybean crop forecast for Brazil at 153 million tons for 2023/24, though local agency Conab estimates it at 147.3 million tons.
• In Argentina, the forecast has been slightly reduced by 0.5 million tons to 49.5 million tons, based on data from the Argentine Ministry of Agriculture.

Soybean export forecasts for Brazil and Argentina have been increased by 1 million tons each, reaching 103 million tons and 5.6 million tons, respectively. Additionally, China's import forecast has been raised by 3 million tons to a record 108 million tons due to larger-than-expected deliveries in the fourth quarter.

Global Balance and Production Adjustments

For the 2024/25 fiscal year, the global balance of soybeans shows several adjustments compared to June estimates:

• Initial reserves have increased to 111.25 million tons, following balance adjustments for FY 2023/24.
• The global production forecast has been slightly reduced by 0.41 million tons to 421.85 million tons, still 6.7% higher than the 2023/24 figure.
• World consumption is estimated at 401.54 million tons, significantly lower than the production level.
• The global export forecast remains at 180.2 million tons.
• Ending stocks have been reduced to 127.76 million tons.

In the United States, soybean production estimates have been reduced by 0.4 million tons to 120.7 million tons due to a reduction in sowing area.

Market Reactions and Futures

According to the report, November soybean futures on the Chicago Stock Exchange fell by 0.2% to $391.41/t, marking a 7.7% decline since the June report. Large funds increased their net short positions to a record 172,605,000 contracts on July 9, indicating higher price expectations.

Rapeseed and Sunflower Production Adjustments

The global rapeseed production forecast for 2024/25 has been increased by 0.8 million tons to 87.9 million tons, with notable increases for Canada and the EU. Conversely, the world sunflower production forecast has been reduced by 0.6 million tons to 54.8 million tons, with decreases for Ukraine and the Russian Federation, while China and Türkiye saw slight increases.

Rapeseed Futures and Market Impact

August rapeseed futures on the MATIF exchange in Paris fell by 0.4% to €474.5/t ($517.5/t) amid heatwaves in Ukraine and eastern EU, affecting harvest prospects.

The USDA's optimistic balance sheets for soybeans in FY 2023/24 and 2024/25 have led to a slight decrease in soybean quotes. However, the market remains sensitive to production forecasts and global demand, particularly from major players like China. Stakeholders will need to monitor these trends closely to navigate the evolving landscape.

Comment

The recent USDA report highlights the complexities of the global oilseed market, where adjustments in one region can significantly impact global prices and supply chains. As the market adjusts to these new forecasts, strategic planning and timely responses will be crucial for traders and producers alike.