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Recovering EU Rapeseed Production Offsetting Lower Imports

In 2017/18, EU rapeseed production is forecast to recover to 22.0 million tons. This is expected to diminish the need for extensive imports in the coming year while allowing processors to maintain crush at high levels - similar to 2016/17. Stock levels are expected to remain tight given the low carryin. The developing tight global supply situation could limit imports, stock building, and higher crush. With the EU having limited growth forecast for rapeseed meal production in 2017/18 and a slight decline in domestic sunflowerseed production, soybean and soybean meal imports are projected to recover.

As the new rapeseed season develops, any further production shortfalls in the major producing and exporting countries would further tighten the global canola market, ensuring price premiums for rapeseed over other oilseeds.

The European Union experienced a short rapeseed crop in 2016/17. However, due to Australia’s record production and large exports, European oilseeds processors managed to import at record levels and to expand crush volume to meet the growing demand for vegetable oils. Consequently, rising rapeseed meal production, along with large supplies of sunflowerseed meal available from imports and domestic crush, negatively impacted soybean meal demand. This resulted in declines for both soybean and soybean meal imports and contributed to declines in U.S. exports to the region. With 2017/18 world soybean supplies at record, prices should remain competitive, furthering opportunities for U.S. growers and exporters to gain back some of the volumes lost.

OVERVIEW

2017/18

Global oilseed production is forecast higher this month to a record 577 million tons. Soybean crop prospects are raised for the United States and Russia, partially offset by reductions in India and Canada. Global peanut forecast is lowered on reductions in India’s crop more than offsetting gains in the United States. A larger rapeseed crop is projected for the European Union which more than offsets reductions for Canada and the United States. Cottonseed production is raised for the United States and China, partly offsetting a reduction in Australia. Higher sunflowerseed output is projected for Russia. Global soybean imports are down this month on reductions for the European Union and Russia, while soybean exports are up on higher projections for the United States, offset by reductions in Argentina. Global soybean stocks are raised this month with higher stocks in the United States, Argentina, and Brazil, offsetting smaller stocks in Canada and India. The U.S. seasonaverage farm price for soybeans is lowered $0.10 this month to $9.30 per bushel.

2016/17

Global oilseed production is virtually unchanged this month. The sunflowerseed and rapeseed production estimates are raised for the European Union but are offset by reductions in the palm kernel crop in Malaysia and cottonseed in Australia. Global soybean imports are down on smaller shipments to the European Union and Russia which more than offset gains in Vietnam. Exports are forecast lower this month on reductions for Argentina and Brazil exceeding gains in the United States. Global soybean ending stocks are raised this month on increases in Argentina and Brazil more than offsetting reductions in the United States. The U.S. season-average farm price for soybeans is unchanged this month at $9.50 per bushel.

SOYBEAN PRICES

U.S. export bids in July, FOB Gulf, averaged $384/ton, up $28 from last month. FOB Brazil Paranagua averaged $388/ton, up $28 from last month. FOB Argentina Up River averaged $378, up $23 from last month. Prices in July were temporarily supported by a wide range of estimates and uncertain soybean crop prospects in the United States. However, prices started trending lower at the beginning of August, following improved precipitation and cooler temperatures. Abundant global supplies of soybeans are likely to pressure prices.

For the week ending July 27, U.S. 2016/17 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 36.2 million tons compared to 28.6 million a year ago. Total commitments to the world are 60.8 million tons, compared to 52.4 million for the same period last year.

2017/18 OUTLOOK CHANGES

  • United States
    • Soybean exports are raised 2.0 tons to 60.6 million in response to a larger crop projection.
    • Soybean meal exports are lowered 181,000 tons, following a reduced crush forecast.
  • Argentina
    • Soybean exports are down 500,000 tons to 8.0 million in line with reductions for 2016/17.
    • Soybean meal exports are slashed 1.1 million tons to 31.2 million reflecting lower crush. Prospects for soybean meal production reflect the slowdown in 2016/17 production and exports.
  • Canada
    • Rapeseed exports are lowered 200,000 tons to 11.0 million, following a lower production forecast.
    • Rapeseed meal exports are down 100,000 tons to 4.6 million on lower crush.
  • China rapeseed meal imports are raised 120,000 tons to 700,000 and soybean meal exports are lowered 100,000 tons to 1.4 million. Both of these are in response to strong protein meal demand.
  • European Union
    • Soybean imports are lowered 200,000 tons to 14.6 million, reflecting lower trade in the current marketing year as well as a larger rapeseed crop in 2017/18.
    • Soybean meal imports are down 100,000 tons to 19.5 million and rapeseed meal imports are cut 120,000 tons to 300,000, both on higher rapeseed crush.
    • o Palm oil imports are lowered 100,000 tons to 6.5 million, on greater domestic supplies of rapeseed oil.
  • India
    • Peanut exports are slashed 350,000 tons to 800,000 on lower crop prospects.
    • Soybean oil imports are up 100,000 tons to 4.2 million in response to a lower crush and smaller supplies.
  • Japan palm kernel meal imports are up 200,000 tons to 1.1 million on a growing renewable energy market and stronger demand for biomass.
  • Mexico soybean meal imports are cut 250,000 tons to 2.5 million with growing reliance on soybean imports for domestic crush.
  • Russia
    • Soybean imports are down 500,000 tons to 1.8 million and soybean meal imports are slashed in half to 200,000 tons, following a larger soybean crop.
    • Sunflowerseed oil exports are raised 100,000 tons to 2.2 million in response to improved sunflowerseed crop prospects.
  • Thailand soybean meal imports are down 100,000 tons to 3.0 million in line with reduction in protein meal demand in 2016/17.
  • Venezuela soybean meal imports are reduced 100,000 tons to 565,000 as economic conditions continue to deteriorate.
  • Vietnam soybean meal imports are up 100,000 tons to 5.5 million, reflecting strong protein meal consumption growth in 2016/17 and expectations that this trend will continue in 2017/18.

2016/17 TRADE CHANGES (on pace of trade unless specified otherwise)

  • United States
    • Soybean exports are boosted 1.4 million tons to 58.5 million.
    • Soybean meal exports are cut 272,000 tons to 10.5 million.
  • Argentina
    • Soybean exports are down 1.0 million tons to 7.0 million.
    • Soybean meal exports are slashed 750,000 tons to 31.0 million.
    • Soybean oil exports are lowered 100,000 tons to 5.5 million.
  • Brazil
    • Soybean exports are down 500,000 tons to 61.0 million.
    • Soybean meal exports are down 500,000 tons to 14.3 million.
  • China
    • Rapeseed imports are up 200,000 tons to 4.1 million.
    • Rapeseed meal imports are raised 200,000 tons to 850,000.
    • Rapeseed oil imports are up 100,000 tons to 850,000.
    • Soybean meal exports are lowered 100,000 tons to 1.3 million.
    • Peanut exports are down 100,000 tons to 400,000.
  • European Union
    • Rapeseed imports are boosted 380,000 tons to 4.8 million.
    • Soybean imports are lowered 200,000 tons to 13.8 million.
    • Palm oil imports are down 100,000 tons to 6.5 million.
  • India soybean meal exports are up 250,000 tons to 1.7 million.
  • Japan palm kernel meal imports are up 200,000 tons to 1.0 million.
  • Malaysia palm oil exports are down 100,000 tons to 16.5 million.
  • Mexico soybean meal imports are cut 200,000 tons to 2.2 million.
  • Philippines soybean meal imports are reduced 200,000 tons to 2.5 million.
  • Russia
    • Soybean imports are down 250,000 tons to 2.0 million.
    • Sunflowerseed meal exports are reduced 100,000 tons to 1.5 million.
  • Venezuela soybean meal imports are cut 110,000 tons to 500,000.
  • Vietnam soybean imports are up 200,000 tons to 1.9 million.
PARIS GRAIN DAY 2018

III АГРАРНИЙ ЕКСПОРТНИЙ ФОРУМ