Oilseeds record significant price gains

05-07-2023 | Feed statistics | Analysis

Soy in Chicago and rapeseed in Paris were up about 7-8% at the beginning of the week compared to the middle of last week. In particular, a new report from the US Department of Agriculture USDA on soybean sowing in the United States gave impetus to higher prices.

In March of this year, the USDA still assumed that the acreage of soybeans would increase slightly compared to last year. The new report from late last week shows the opposite to be true. Instead of slightly more soy, the Americans are growing 5% less of this crop than in 2022. This outcome surprised the market and resulted in a price jump.

Yield potential of corn higher than soybean

The growers themselves are not surprised that more corn has been sown and less soy. If the weather conditions are good for sowing corn, it will be at the expense of soya. Simply because the yield potential of corn is higher than that of soy. And in the Corn Belt, conditions to sow corn this year have been near perfect, except in North Dakota.

New stock estimates

The influence of the new acreage figures on prices was reinforced by new stock estimates. It shows that US soy stocks were 18% smaller on June 1 than a year ago. Stocks are therefore smaller than analysts had predicted, which also supports rising prices.

Pressure on rapeseed prices

With regard to rapeseed, some pressure on prices was expected. Partly because the harvest is imminent in the European Union and because a decent supply is expected worldwide. For example, the acreage in Canada is slightly larger than analysts predicted.

Yield expectations in European Union

On the other hand, yield expectations in the European Union are falling somewhat. The French market agency Strategie Grains even lowered its forecast by 600,000 tons to 19.8 million tons. In a new forecast, the European Commission is aiming for a production of 19.91 million tons. That is 1.9% more than the 19.54 million tons in 2022, but 0.3 million tons less than predicted in the May estimate this year.

Canada grows 3.2% more rapeseed

Rapeseed cultivation in Canada has expanded by 3.2% this year to 8.94 million hectares. This is evident from preliminary figures from Statistics Canada (StatCan). The expansion of the rapeseed area in Canada is greater than analysts had expected. Nevertheless, they assume that this fact will only have a limited effect on the final production this year. The experts emphasize that the weather conditions in the growing season will have a much greater influence on the final quantities coming from the land.
Globally, Canada is by far the country with the largest rapeseed production. In the past year, a total of 18.2 million tons was produced. Most of the rapeseed cultivation is in the province of Saskatchewan with a share of just over 50% of the total production. About 30% grows a little more to the west in the province of Alberta and another 15% grows more to the east in Manitoba.
We see the expansion in the rapeseed area at the heart of production. In Saskatchewan, cultivation has expanded by 8.8% to just over 5 million hectares. Elsewhere, there is a smaller crop. In Alberta, according to current figures, the shrinkage is almost 2.5% and in the other areas there is almost 5% less sowing.

John Ramaker Commodities market editor, Boerderij