No noteworthy change in product prices & Europe's rapeseed is entering it's end of season

No noteworthy change in product prices & Europe's rapeseed is entering it's end of season

Your Bi-weekly update on edible oils & fats by Aveno
April 18th, 2019

Politics and Weather concerns

Markets are focussing on the end of season and new crop/productions

No noteworthy change in product prices these past two weeks. The tone continues to be weak but the weather remains a wildcard.

The soybean harvest in South America is in full swing and according to crop analysts, despite a reduced Brazilian harvest, this season the global soybean harvest could grow by 18 million tons to a record 359m, because of big crops in the U.S. and Argentina. Furthermore in the U.S. spring storms and wet fields may slow down plantings of field crops, and due to floods some land will be taken out of production. It is too soon to tell how much land will not be planted or changed to a different crop. As we go, there could be land intended for corn that is shifted to soybeans, which have a shorter growing season (harvest sept-oct).

We are entering the higher production season for palm oil and stocks remain high. As such palm oil will need to win new demand in an effort to draw stocks. Fundamentally the market will continue to look for stock reductions as we move through the coming months and the extent of these will set the tone for further pricing.

For rapeseed oil, in Europe, we are entering into the “end of season”. Traditionally MJJ can be very “technical” and due to annual plant maintenance downtimes the availability of oil can be a temporary problem. There is enough seed to end the season and buyers and sellers of rapeseed are reluctant to move; so markets remain calm. Farmers are not selling seed and oil mills have enough seed coming from imports. Oil mills want to buy new crop seed but farmers are not selling. We also note there is no discount for new crop rapeseed oil (august) and that is a sign of tension. The outcome of the 2019 harvest remains somewhat clouded. Plantings happen after the grain harvest and since it was too dry last year, less area was planted. Weather conditions are the biggest uncertainty. Above-average high temperatures in the previous months and lack of rainfall in some areas cause concerns on crop development. But so far plants are not showing signs of drought-related stress. In the wake of last years’ experience, farmers are cautious not to contract volumes they won’t be able to supply. On top, Australia needs heavy rain in the coming weeks for their rapeseed crop of which traditionally a big chunk goes to Europe…

Source: European Commission

The ECB left interest rates unchanged, as expected, and left their economic outlook also largely unchanged, with a downside risks still present. Generally markets expect the Federal Reserve to increase interest rates later in the year which is still somewhat supportive to the U.S. currency.

Source: ECB

US dollar vs EURO evolution from 4 January 1999 to 18 April 2019
Minimum (26 October 2000): 0.8252
Maximum (15 July 2008): 1.5990
Average: 1.2055

17 April 2019 - EUR 1 = USD 1.1301

On the energy front we saw petroleum go through the $70 marker because of unrest in Libya and Venezuela. The boycott against Iran and OPEC threatening to tighten the supply contributed to higher prices. On April 16th Brent-oil was quoted at $71.71/barrel. This did not (yet) have a big impact on biodiesel production. In the continuing biodiesel story it was reported that Colombia has now officially joined Malaysia and Indonesia in calling the E.U. to drop its discriminatory treatment of palm oil for biodiesel. Some 95% of the world’s palm oil is produced by these three countries which claim that European legislation discriminates against palm oil in favor of soybean and rapeseed oil. And in Canada in an effort to reduce the negative impact resulting from China’s canola import ban, biodiesel producers are pushing for a big Canadian biodiesel mandate. Before the volume fell to zero China was importing about 4.5 million tons of canola (rapeseed)…

“There is only one thing certain and that is that nothing is certain.”— Gilbert K. Chesterton. 

And for sure you can never be certain about politics nor about the weather. Dr Aveno’s wise advise is to stay out of (technicalities on) the nearby positions and always cover your needs, at least, for the running month +3.

Don't forget to check out our other bi-weekly updates!

There is some complexity to the business we daily operate in. To help understand the business of being an edible oil and fat producer we've launched this bi-weekly newsletter.

Every two weeks we will share an update about edible oils and fats. You can find all previous updates on: https://www.aveno.be/search/label/newsletter

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Unless otherwise mentioned the crude oil values quoted in these documents are prices landed in EU without import duties, handling, storage, financing, refining, packing, transport or any other cost related to bring the product to market. They are used as market trend illustration. Substitution of oils is possible but different oils have different fatty acid profiles and are not all interchangeable for all applications. One can make biodiesel from all oils and fats but one cannot make mayonnaise from coconut oil. This document is exclusively for you and does not carry any right of publication or disclosure. This document or any of its contents may not be distributed, reproduced, or used for any other purpose without the prior written consent of AVENO. The information reflects prevailing market conditions and our present judgement, which may be subject to change. It is based on public information and opinions which come from sources believed to be reliable; however, AVENO doesn’t guarantee the correctness or completeness. This document does not constitute an offer, invitation, or recommendation and may not be understood, as an advice. This document is one of a series of publications undertaken by AVENO and aims at informing broadly a targeted audience about the edible oils & fats market. AVENO’s goal is to keep this information timely and accurate however AVENO accepts no responsibility or liability whatsoever with regard to the given information.

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Aveno NV - The one stop shop for all your Oils and Fats: No noteworthy change in product prices & Europe's rapeseed is entering it's end of season
No noteworthy change in product prices & Europe's rapeseed is entering it's end of season
No noteworthy change in product prices & Europe's rapeseed is entering it's end of season
Aveno NV - The one stop shop for all your Oils and Fats
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