According to data from local maritime agency NABSA, Bunge will ship the soybean meal from the Terminal 6 facility it operates with Argentina’s AGD in San Lorenzo, north of the farm hub city of Rosario, where the vessel NORDTAJO is expected to dock around July 16 to transport the cargo.

Why it matters: As trade tensions with the U.S. continues, China is seeking new soybean suppliers.

Ship tracking data on LSEG Workspace shows the vessel currently off the west coast of Africa on route to San Lorenzo.

Reuters reported last month that several Chinese animal feed makers had signed a deal for a maiden soymeal shipment as China’s animal feed industry looks to broaden its supply options to mitigate potential disruptions from the U.S.-China trade war.

The small initial shipment is seen as test case and could potentially unlock more such trades in the future.

Argentina is the world’s largest exporter of soybean meal. China, meanwhile, is the world’s largest importer of soybeans, but does not typically buy soybean meal, rather processing the beans itself to produce the meal it uses as animal feed.

Most of the soybeans imported by China come from Brazil and the United States, with whom Beijing is currently engaged in a trade war.

In 2024, Argentina exported a total of 27.2 million tons of soybean meal, valued at $10.55 billion. Vietnam was the main destination for shipments, accounting for 15 per cent of the total.

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The “excellent crop” in Brazil’s top-grain producing state Mato Grosso helped offset the reduced yields in other areas, AgRural said, though cautioning that grain quality there may drop if excessive rainfall is registered in February.

Brazilian farmers had harvested 3.9 per cent of their soybean crop by last Thursday, the consultancy added, the lowest level for this time of year since the 2020/21 cycle as adverse weather conditions have been affecting work in the fields.

Lower rainfall volume in Mato Grosso helped producers make some progress last week but harvesting is still delayed in the state, AgRural said. At the same time last year, 10.8 per cent of Brazil’s soy crop had been reaped.

The delayed soy harvest has also impacted sowing of Brazil’s second corn crop, which represents about 75 per cent of the national production each year and is planted after soybeans are harvested on the same fields.

Second corn planting in Brazil’s key center-south region had reached 2.2 per cent of the expected area by Thursday, AgRural said, up from 0.3 per cent in the prior week but well below the 11.4 per cent seen a year earlier.

— Reporting by Gabriel Araujo

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In the report released by the USDA on Mar. 14, the attaché estimated 17.20 million hectares of soybeans are to be harvested this marketing year. Based on projected yields of 2.88 tonnes per hectare, that’s to reap 49.50 million tonnes of soybeans, a half million below the USDA’s official estimate, which is based on the harvested area at 16.50 million hectares with yields of 3.03 t/ha.

The attaché said the dry conditions Argentina experienced in January were largely responsible for the reductions, which were further compounded by the February rains. Those ranged from insufficient in some parts of the country, such in the province of Cordoba to excessive in others, such as the Buenos Aires and Santa Fe provinces. Nevertheless, Argentina remained well on course to more than double its soybean output of 20.50 million tonnes from the drought-stricken 2022/23. The USDA’s official estimate of that crop was 25.0 million tonnes.

Argentina’s soybean beginning stocks were pegged at 4.41 million tonnes by the Buenos Aires desk compared to the USDA call of 6.61 million. The attaché projected soybean imports at four million tonnes versus the USDA’s 5.1 million. Together with the productions numbers, brought the total supply to 57.91 million tonnes according to the attaché and 61.71 million in the department’s eyes. Meanwhile, the two agreed on the size of the country’s soybean crush, estimated to be 39.0 million tonnes.

But they differed on soybean exports, with the attaché foreseeing six million tonnes while the USDA was more conservative at 5.10 million. Total domestic consumption also saw different numbers with the attaché at 45.30 million tonnes and the department at 46.25 million. All of that generated a wide disparity in 2023/24 ending stocks, with the Buenos Aires desk set at 6.61 million tonnes compared to the department’s much larger call of 10.36 million.

Argentina is the world’s third largest grower of soybeans, behind Brazil and the U.S., but it’s the world’s largest exporter of soymeal and soyoil, according to the USDA.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

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A total of 10.523 million tonnes of canola were crushed in the country in 2023, which was up by 20.0 per cent from the previous year and above the previous record of 10.290 million tonnes set in 2020.

Meanwhile, Canada’s soybean crush decreased by 5.7 per cent in 2023 to 1.763 million tonnes. Oil production totalled 4.422 million tonnes for canola and 329,856 tonnes for soybeans. Meal production totalled 6.200 million tonnes for canola and 1.371 million tonnes for soybeans.

High prices and increased exports of canola oil were behind the strong canola crush pace, according to StatCan. In 2021, the price of canola oil increased by 65.2 per cent over the previous year, and it has remained elevated ever since. In 2023, Canadian exports of canola oil increased 20.3 per cent from 2022, totalling 3.150 million tonnes. This trend was underpinned by higher supplies of canola, as production of canola was 31.2 per cent higher leading into 2023 than in the previous year.

In the United States, over the 2023 calendar year, oilseed processors crushed 61.268 million tonnes of soybeans which was up by 2.6 per cent from the previous year. A total of 2.059 million tonnes of canola was crushed in the U.S, marking a 19.2 per cent increase from 2022. Oil production totalled 12.052 million tonnes for soybeans and 825,227 tonnes for canola, while meal production totalled 45.241 million tonnes for soybeans and 1.198 million tonnes for canola.

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That would also be good for Canadian grain and oilseed prices if it happens.

The highest corn prices so far this year occurred during the first two days of January, and they have been heading lower since.

The odds of those prices remaining that high through spring is slim based on data compiled from the last couple of decades, according to Ed Usset, grain marketing economist with the University of Minnesota.

“In 16 of 20 years the corn market found a way to take out those highs set in January,” he told delegates attending the 2024 Commodity Classic.

Soybean prices are less reliable than corn, but there is also a good chance that market will take out the January high. It has done so in 17 of the last 20 years.

So, is corn heading back to US$5 per bushel?

“I don’t guarantee anything, but I think this is strong evidence that it could happen,” said Usset.

He has “no clue” what could cause the rally. He could offer up 10 reasons and it would be the 11th that would trigger the bull run.

But the upshot is that farmers with unpriced corn or soybeans in their bins might want to hold on a little longer and wait for better prices this spring.

He also thinks there is reason to be long-term bullish on grains and oilseeds because of the exploding renewable diesel industry.

Sixteen proposed new U.S. soybean crush plants will create more than 600 million bushels of new annual demand for the crop.

“I know things feel very bearish right now, but I like to think there is potential for this to create some turmoil in the market,” said Usset.

“This is an echo of the boom that occurred 15 years ago in the ethanol industry.”

That boom bolstered the price of corn, which in turn elevated prices for soybeans, wheat and just about every other crop farmers grow.

That begs the question — should farmers change their marketing strategy once the return to a bull markets arrives?

The short answer is no, said Usset.

He is a firm believer in growers knowing their cost of production and pricing 80 percent of their grain with pre- and post-harvest marketing efforts rather than accepting the harvest price.

Iowa corn growers who used that strategy achieved an average 37 cent per bu. premium over growers who took the harvest price between 1989 and 2002.

“That’s 37 cents a bu. on every bushel of corn produced over a 34-year period,” said Usset.

“You can see the advantage of pulling together pre- and post-harvest marketing.”

For soybeans, the advantage was nearly $1 per bu. and for hard red spring wheat in the Red River Valley it was 27 cents.

Usset analyzed the same data during the “golden age” of the ethanol boom between 2007 and 2013, comparing it to the seven-year periods before and after the boom.

The average price of Iowa corn during the seven-year boom was higher than the maximum price in the seven-years before and after the boom.

“That’s some good times,” he said.

The important thing to note is that the grower who used pre- and post-harvest marketing strategies outperformed those who took the harvest price in all three of those periods, said Usset.

—Sean Pratt writes for the Western Producer.

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The May canola contract closed at C$591.00 per tonne on Feb. 28, up from C$584.10 one week earlier. Prices started the week in decline until a two-day rebound after the weekend. Ken Ball, a Winnipeg-based trader at PI Financial, said canola’s behaviour was similar to other crops including corn, wheat and soybeans.

“They’re all showing a little hint of some short-covering (and uncovering) some support. But not enough to trigger a lot of excitement yet,” he said. “We don’t yet have a lot (of news) to go on. There’s not much sparking anything.”

With spring approaching, as well as potential lows in prices, Ball expects more short-covering in the coming weeks and end users to increase their coverage.

“The balance should start to shift, but it’s hard to say if there’s anything really big brewing right now,” he added. “As we move into the month of March, the markets have to get nervous about spring. There’s always some weather issues. We never have a smooth spring across all of North America generally.”

Soyoil placed large amounts of pressure on canola prices, according to Ball. Over the past 10 sessions, the May contract declined eight times and lost 1.74 U.S. cents per pound over that span.

“The stocks have tightened up, but we anticipated bean oil to be firmer than it has been. It’s been on the weak side,” he said. “It’s not showing a bottom at all. It’s still in a bit of a downward channel.”

While Canada’s canola crush has increased over the past year, exports have been down nearly 33 per cent, causing even more pressure on the oilseed. However, there are whispers that much-needed overseas demand may be coming.

“We’ve heard talk that China may have stepped up some canola buying over the last month or two, but it hasn’t yet showed up on the export (numbers). So far, it’s only been rumours, but the exports may perk up a bit as we go into spring,” Ball said.

He also described March as a “transitional month” as positions are exited prior to the expiry of March contracts. However, trading activity hasn’t changed recently, according to Ball. Right now, canola is still looking for a catalyst.

“We’ve had a little bit of moisture recently (on the Prairies), but we’ve barely made a dent in the drought in the real dry areas,” he said. “I’m not getting a lot of feedback from my clients this year about (canola) acreage decisions. I guess a lot of them are waiting longer than usual to make those decisions…I think we’re going to see canola acres come down a bit.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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As of Feb 13, 2024, the net managed money short position in canola futures came in at 147,603 (7,808 long/155,411 short), which was up by roughly 9,000 contracts from the former record hit just the previous week.

Open interest in the canola market came in at 308,702 contracts, which was up by 3,894 on the week.

At the Chicago Board of Trade, the net short position in soybeans increased by about 3,000 contracts on the week at about 124,400 contracts.

Meanwhile, the net short position in corn grew by about 11,300 contracts on the week to come in at roughly 305,000 contracts.

In wheat, the Chicago soft wheat market reported a net short position of about 57,900 contracts. The net short in Kansas City hard red winter wheat came in at roughly 34,300 contracts. In Minneapolis spring wheat, managed money traders were holding a net short of around 28,800 contracts.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

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The official USDA estimate was trimmed from 163 million tonnes in November to 161 million in December. The department is set to issue its January supply and demand estimates on Jan. 12, and it remains to be seen if any data from its Brazil attaché could be incorporated into the report.

Several private consultancies have dropped their Brazil soybean projections as well, to the low to mid 150 million-tonne range. Among those were Dr. Michael Cordonnier of Soybean and Corn Advisor Inc. who recently lopped off two million tonnes from his Brazil projection, now at 151 million.

The root cause for the reduction in projected soybean output in Brazil were the delays in getting the crop into the ground. Very heavy rains in the south of the country, such as in Rio Grande do Sul for example, prevented farmers from getting onto their fields in a timely manner. Then extremely dry conditions in central and northern Brazil also kept producers at bay, with any sown crops lacking sufficient soil moisture. Several states were caught up in this drought, including Mato Grasso, Mato Grasso do Sul, Maranhao, and Tocantis.

Of the dry states, they received rain over the last few weeks, greatly helping their crops. Meanwhile, Parana has been one of the few states that’s experienced favourable growing conditions.

Despite the planting difficulties, Brazil still saw the area sown expand from 2022/23. The attaché estimated the previous crop at 44 million hectares and 45.2 million for this year. The USDA was a pinch higher for both, 44.3 million hectares in 2022/23 and 45.6 million in 2023/24.

The Brasilia desk projected a slight decline in Brazil’s soybean exports for 2023/24, with expectations of 100 million tonnes, versus the 102 million the previous year. The USDA projected 102 million tonnes last year and 101 million for this year.

The USDA and its attaché agreed the domestic crush is to be 55.5 million tonnes in 2023/24.

Both were not far off on their calls for total domestic consumption, with the USDA at 59.45 million tonnes for 2023/24 compared to 53.7 million a year ago. The Brasilia desk predicted 59.30 million for this year, up from 56.9 million in 2022/23.

However, the two are very far apart when it came to Brazil’s ending stocks. The USDA placed them at 3.48 million tonnes, up from 2.48 million in 2022/23. Meanwhile its attaché pegged them at only 683,000, dropping from 1.08 million the year before. The latter cited increased use of soybeans for biofuel, along with growing international demand.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Field work is more advanced in top grain state Mato Grosso, where yields “are much lower than normal” after hot and dry weather destroyed part of the crop. In large producer Parana state, the yields are “very good and in line with farmers’ expectations,” AgRural said.

At this time last season, 0.04 per cent of Brazil’s soybean had been harvested, AgRural said.

Goias and Mato Grosso do Sul have started reaping their soy from fields in isolated areas, according to the consultancy.

In Mato Grosso, where crops suffered from a lack of humidity for much of the cycle, rains now are making it difficult for harvesters to advance in some areas, as is common in January, AgRural noted.

Last year, AgRural forecast Brazil would produce 159 million tons of soybeans this season, but it said it will revise that projection in coming days.

At least two consultancies have said the outlook worsened for Brazil’s soy crop in January, sharply lowering output forecasts to between 151 million tons and 153 million tons.

The harvest of Brazil’s first corn crop, which is planted in the summer, reached 3.3 per cent of the cultivated area in the Center-South last week, compared to 2.3 per cent in the same period last year, AgRural said.

As soy is being reaped from fields, planters have began to sow Brazil’s second-corn in Parana state, AgRural said. Second corn is planted after soybeans and represents about 75 per cent of national corn production depending on the year.

In Mato Grosso, farmers’ priority at the moment is the sowing of second-season cotton, which has a shorter climate window, though the start of second corn planting is imminent, AgRural said.

–Reporting for Reuters by Gabriel Araujo and Ana Mano.

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As of Nov. 28, 2023, the net managed money short position in canola futures came in at 81,770 (6,918 long/88,688 short), a decrease of about 5,000 from the previous week.

Open interest in the canola market came in at 256,563 contracts, which was down by 8,732 on the week.

At the Chicago Board of Trade, fund traders were on the other side of the market, liquidating some of their large net long position in soybeans, taking it to roughly 71,100 contracts from 85,800 the previous week.

Meanwhile, the net short position in corn was up by about 11,000 contracts, coming in at about 212,000 contracts as traders added new shorts and liquidated some longs.

In wheat, the Chicago soft wheat market reported a net short position of about 124,000 contracts. The net short in Kansas City hard red winter wheat came in at roughly 49,700 contracts.

In Minneapolis spring wheat, managed money traders were holding a net short of around 29,100 contracts, which was up by just over 1,000 contracts on the week.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.

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