Brazil supports your rapeseed price
A few weeks ago I talked about how Brazilian weather was a critical observation point for oilseed markets as farmers plant what is expected to be a record-breaking soybean crop.
Since then (Oct. 31), soybean futures in Chicago (May 24) have risen 5.4%, with the contract hitting its highest level since late August on Tuesday. Over the same period, Paris rapeseed futures (24 May) have seen support, although not as strong, but the contract has gained 1.8% over the same period, in sterling terms this is around £6.00/t .
We have reported that this Brazilian crop (2023/24) will be a bumper crop for many months. But is the current weather really a cause for concern for oilseed markets and could it maintain positive sentiment in the market?
As a result, there has been some rainfall over the past two weeks in the northern part of Brazil, where a significant portion of soybean production is grown, but in parts this has been minimal. Conditions across the region were oppressive. In addition, the south, which is equally important for production, experienced heavy rains that slowed down sowing.
For example, in the Mato Grosso region (largest soy-producing region), some areas received only 2.5 cm of rain. This was a time when temperatures in the region approached 40°C. May not be the most ideal conditions for a just sown soybean plant. Sowing in the region is 88.1% complete, which is below last year’s figure when 97.4% of the crop was sown (Conab).
Could this continue to support rapeseed?
Many forecasters are predicting a Brazilian harvest of 160 million tons or more, higher than last year’s record production of 154.6 million tons.
In my opinion, it is still too early to make hasty predictions that there will be significant cuts in forecasts. However, some revisions are already underway. Earlier this week, Ag Rural estimated Brazil’s harvest at 163.5 million tons, compared to 164.6 million tons in October. Advisers also said new cuts could be made later this month, depending on weather conditions.
The weather outlook for Brazil looks more positive. Widespread rainfall is expected in many major soy-growing regions by the end of this weekend, which could ease concerns.
Another point to add is that although this dry weather has supported prices, Brazilian ending stocks of soybeans for 2023/24 are currently estimated at 39.7 million t (USDA). This is an increase of 6.3 million tonnes compared to the previous year (2022/23) and the highest increase ever recorded. Partly due to the expected increase in Brazil, global soybean stocks are estimated at 114.5 million tonnes at the end of 2023/24, the highest level since 2018/19 (USDA). Does the current weather in Brazil support prices? Yes. Are recent production cuts enough to wipe out the large global surplus of soybeans? Not yet, as the decorations have been minimal so far. This should continue to be monitored as it will drive canola prices higher into 2024.
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