Soybeans (Source: CME)
US soybean futures ended higher, rebounding from early price weakness. Signs of stability in external financial markets and the exhaustion of fund selling enabled prices to bounce in unison with higher feed grains, analysts say. Spillover support from solid gains in corn and wheat and oversold market conditions opened the door for advances. Traders are still concerned about uncertainty of actual yield potential. Ability of prices to bounce despite lower-than-expected export inspections figure confirmed that last night's price action washed out most of the fund liquidation, says Mike Zuzolo, president Global Commodity Analytics. CBOT Nov soy end up 1 3/4c at $12.59 3/4/bushel.
Soybean Meal/Oil (Source: CME)
Soy product futures closed mixed, with soymeal managing to bounce back from early losses in unison with a recovery in soybeans. Soyoil futures finished lower, unable to maintain a midday bounce amid mixed signals from external energy markets, analysts say CBOT Dec soymeal end up $0.10 at $330.20/short ton, and Dec soyoil dropped 0.24c to 52.40 cents/pound.
Soybeans Take A Back Seat To Corn (Source: CME)
Reduced production of soybeans in the U.S. and expectations that South America's crop won't make up for the shortfall could push inventories to historic lows by next summer, boosting prices. U.S. soybean prices have been mostly stagnant this year, masking a decline in U.S. production. Farmers increasingly favor planting more-lucrative crops such as corn, which yields a larger crop per acre, making the grain more profitable at current prices. Some South American farmers also are shifting to higher-priced crops. Paulo Shimohira, a Brazilian farmer in the northern state of Bahia and the central state of Goias, said he is planning to increase corn production by roughly 3,700 acres, while scaling back the number of acres he sows with soybeans when he plants his crop in the coming months. "Corn looks like it's going to be a good business," he said.
Crop prices have held up better than other commodities in the face of concerns over slowing economic growth. Yet corn, wheat and cotton prices have faced some sharp swings, while soybeans have traded mostly between $13 to $14 a bushel this year. U.S. soybean futures dipped below that range amid a broad global selloff last week, settling Friday at $12.58 a bushel, the lowest level of the year. China particularly relies on the western hemisphere for oilseeds to feed livestock and produce cooking oil as diets change among its emerging middle class. Yet this past spring, U.S. farmers started to set the stage for tightening supplies by cutting back on the number of acres they sowed with soybeans to take advantage of strong corn prices.
Growers in Brazil and Argentina could follow suit in the coming months as they plant, pulling back from their recent role of making up for shortfalls in the U.S. harvest. Further clouding the outlook for crops in Brazil and Argentina is the potential for a La Nina weather pattern, which could bring dry weather and cut crop yields. Agricultural consultancy Celeres forecasts Brazil's corn crop will jump by nearly 9% from a year ago to 58.39 million metric tons. The soy crop is expected to merely rise 0.4% to a record 75.18 million metric tons. Argentina is expected to plant about the same amount of soybeans as a year ago, while corn plantings are seen rising 9% to 10%, said Ricardo Baccarin, vice president of Panagricola, a brokerage.
Little growth in the South American soybean crop would come on top of an expected 7.3% drop in U.S. soybean production. Federal forecasters are projecting end-of-season supplies in the U.S. next summer at 165 million bushels. That's 27% below end-of-season supplies for the crop year that just ended and provides a cushion equal only to roughly 20 days of demand. Goldman Sachs in a recent report predicted soybean prices will rally over the next 12 months as production struggles to keep pace with demand. The bank cited competition for land from other crops and the potential for poor weather in South America as the main threats. "Soybean prices need to either outperform corn prices in coming months to secure sufficient acreage or will need to rally sharply next summer to achieve demand destruction in the face of lower supplies," Goldman Sachs analysts wrote.
India's Soymeal Exports Seen Rising To 5 Mln Tons (Source: CME)
India's soymeal exports are likely to jump nearly 20% on higher production and expectation of rising demand from European countries, a top industry executive said at the weekend. "We feel that India is likely to have a huge soybean crop, which could be in excess of 11 million tons. So the country will need to export 5 million tons," Atul Chaturvedi, chief executive of Adani Wilmer Ltd., told Dow Jones Newswires on the sidelines of the Globoil conference. India, one of the world's largest exporters of soymeal, is expected to ship about 4 million tons of in 2010-11. The country exports the oilmeal mainly to Southeast Asia with Vietnam being one of the top importers. Vietnam bought around 2.9 million tons of soymeal in 2010-11, most of which came from India and South America. Chaturvedi said the Indian soymeal exports to Vietnam could decline nearly 50% next year as the Southeast Asian country is shifting to soybean imports due to rising crushing capacity locally.
"We will not have exports of more than 700,000 tons [to Vietnam]. I think Europe could be one new destination and also Iran via Dubai route," he said. Indian industry has been exploring new markets for its oilmeal exports as favorable seasonal rains have brightened the prospects of summer-sown oilseed crops. But despite higher oilseed production, the country's import of edible oil is unlikely to fall because of rising demand. "We may end up importing around 8.6 million to 8.8 million tons next year," Chaturvedi said. India, the world's top edible oil importer, is expected to buy around 8.5 million tons of the cooking oil from overseas this marketing year through October. The chief executive of one of the country's largest edible oil importers of India also said that the recent rejig in the export tax structure by top edible oil supplier Indonesia was a matter of concern for the Indian refiners.
Indonesia, the world's biggest palm oil producer and exporter, has reduced its export tax on refined, bleached and deodorized palm olein in bulk to 8% from 15% and raised the duty on crude palm oil to 16.5% from 15% effective Sept. 15 to encourage domestic refining. The Indian industry has sought an increase in import tax on refined edible oil to 16.5% from 7.5%, following the Indonesian development.
Crude Palm Oil Prices Set To Fall (Source: CME)
Malaysian crude palm oil prices may fall to MYR2,525 per ton in the next six months on expectation of a rise in its stocks following the export tax cut in Indonesia and possibility of a further decline in crude oil prices, a leading vegetable oil analyst said Saturday. Crude palm oil futures on Bursa Malaysia Derivatives ended Friday at MYR2,992 a metric ton due to a broad asset sell-off on the back of rising concerns about global economic growth. Indonesia has reduced its export tax on refined, bleached and deodorized palm olein in bulk to 8% from 15% and raised the duty on crude palm oil to 16.5% from 15% effective Sept. 15 to encourage domestic refining. "By boosting its refined exports, Indonesia will reduce its own export sales of crude palm oil," said James Fry, chairman of London-based LMC International, at the Globoil conference.
This will put pressure onto Malaysia to raise its own crude palm oil exports to fill the gap, while cutting its exports of refined products in the face of much more competitively priced exports from Indonesia, he added. Indonesia and Malaysia compete with each other in the global market in palm oil and Malaysia mostly exports refined products. If the brent crude falls back to $87/bbl, it may also impact the prices of crude palm oil, Fry said. The current high crude oil prices are not only stimulating new discoveries and output, but also hitting the demand as users shift to other alternatives, he added. "This is why I believe the petroleum prices must fall ... and this will have a direct and negative impact on all vegetable oil prices," Fry said. The analyst also said he expects the soyoil prices in CBOT may fall to just below 50 cents by March.
No comments:
Post a Comment