Crude oil has continued to firm this week as more lockdown restrictions are lifted and talks continue between Saudi Arabia and Russia to persevere with reduced production for another two months.
CBOT soybeans have hit three-week highs, rallying on the idea of more Chinese business coming forward after a further 186,000mln t purchase reported on Wednesday.
The market is also aided by currency. The US dollar is now trading at two-month lows, while in Brazil, the US’s main competitor, the real is trading at two-month highs, making US exports more competitive.
Moreover, stocks in Brazil are beginning to fall quickly, which will mean the Chinese will have to turn to US supplies at some point.
US plantings continue at a good pace, at 75% complete compared with 65% last week and the 68% five-year average. Emergence is 52% against the 44% 5-year average, and the first crop ratings were 70% good/excellent.
Exports of veg oils are starting to pick up. Notably Malaysian palm oil has seen a reasonable recover from its recent lows in Jan-March. Soy oil has followed crude oil and the Malaysian palm market higher.
In Canada, canola plantings are upwards of 80% complete. Some strong winds are drying out the topsoil. Whilst this is not a major concern at the moment, it could affect yield potential if prolonged.
Last month’s storm in Western Australia will cause some to re-seed small areas in coming weeks, but overall, the canola crop is in shape for a good start, with a large export programme still expected.
Matif rapeseed has continued to trade within the same €365-375 range since April. Currently near the top of that channel, it is finding support from the firming crude oil market as well as other veg oils, with fresh news in Europe otherwise lacking.
In the UK, prices began the week lower due to a stronger pound . As Brexit negotiations have gone on with reports of little progress, sterling has weakened, which has brought prices back to week-ago levels.
Crush coverage for old crop remains good, while new crop will be reliant on imports, emphasising the importance of sterling.