Prices for rapeseed remain under pressure from falling soybean market

Improved weather in the U.S. and poor exports continue to put pressure on soybean futures in Chicago.

After a few hot days in the Midwest United States established the cool weather and the promised rain will improve the condition of soybean crops.

According to the USDA NASS, the number of crops in good or excellent condition remained at 54% compared with 70% on average, flowering began 40% of the area compared to 66% in average, which will lead to more late ripening soy.

the Export of soybeans from the U.S. for the week decreased by 34.6% to 559,4 thousand tons, which is 23% lower than the level of last year. Although 317,4 thousand tons were sent to China, the promised revitalization of the procurement are not yet available.

the August soybean futures fell yesterday by $2/t to 327 $/t, the November – to 333 $/t

Chinese state television CCTV reported that the government plans to cancel the import 25% duty on U.S. soybeans that will allow private refiners to resume purchasing, that ended in 2018 with the beginning of a trade war.

the Fall in soybean prices puts pressure on quotes for rapeseed on Euronext rose to 374,25 €/t or 419,04 $/t on the background of forecasts of reduced production in the EU, Ukraine and Australia. Previously projected, the increase in the production and export of rapeseed in Ukraine may not take place because of low yields.

On July 19 in Ukraine with 1.1 million hectares or 83% of the area collected 2.6 million tonnes of rapeseed on the yield of 2.39 t/ha from 2.42 t/ha in 2018. Using low yield gross yield will decline from the earlier forecast of a 3.5 to 3.9 to 3.1-3.2 million tonnes compared to 2,747 mln t in 2018. Exports of canola will remain at last year's level of 2.6-2.8 million MT due to increasing domestic processing.

the Purchase price of rapeseed in Ukraine is lower than last year, so producers are holding back sales because they want low yield to compensate for the higher price.

Traders in the port offer 394-395 rapeseed $/t or 11900-12000 UAH/t, the processors, the factory raised the prices to 11400-11900 UAH/t. Using expensive transportation manufacturers more profitable to deliver the goods to the factories than to ports.

Low oil content makes the discounted prices of domestic rapeseed, however, the intensification of collection and adjustment of production forecasts will force traders to raise prices to enhance purchases.