After a weak end to the year, the soybean market quickly got back on track at the start of the trading week. The main drivers were new export reports and renewed hopes of an upturn in Chinese demand. In particular, the Chinese state-owned company Sinograin caused a stir with a large order that increased total imports from the USA to date to around 10 million tons. The target of 12 million tons set by previous US administrations is therefore coming closer. The USDA also once again confirmed several sales to China, while solid export inspections underpinned the positive market sentiment. In Brazil, however, concerns about possible losses in the export business are growing, especially as the first declines were already recorded in December. Meanwhile, the Brazilian harvest estimate was raised slightly, but this only briefly slowed the upward trend in soybean prices. Technical profit-taking led to a change in direction in the middle of the week, but this was already corrected the following day. At the end of the week, a wait-and-see attitude and positioning ahead of the flood of USDA reports next Monday once again prevailed.
Soybean meal prices followed the price trend of beans, but were particularly volatile in the second half of the week. According to the USDA, the November value for processing was below the previous month but above the previous year's level.
The rally in canola continued throughout the week. The prospect of a possible agreement in the smouldering trade conflict between Canada and China gave prices a strong boost. The mood on the European rapeseed market also turned around: after hitting a 16-month low at the turn of the year, prices rose steadily until Friday.
ZMP Live Expert Opinion
Last week brought fresh momentum to the soybean market, mainly due to large Chinese orders, which strengthened confidence in stronger export demand. Although the US census data for October was disappointing, the latest USDA reports point to a possible turnaround. Speculation about further purchases until the 12 million tonne mark is reached is keeping prices moving. On the supply side, Brazil remains present, although the weaker December exports are a first warning signal. In the case of canola, the market is speculating that the export dispute with China will soon come to an end, which is giving prices a considerable boost. The European rapeseed market also appears to be bouncing back from its low. The forthcoming USDA reports should now set the direction for the coming weeks.
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