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

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…

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.