The soy complex started the week with slight gains in the wake of the WASDE report. Prices initially fell at the start of the week, weighed down by weaker US export inspections and a continued significant shortfall in exports compared to the previous year. Although exports to date have reached around 80% of the official forecast, the pace is below the five-year average. The WASDE itself brought few surprises. US ending stocks remained unchanged, while global inventories increased slightly. Expected adjustments in South America were largely confirmed: higher production was forecast for Brazil, while Argentina remained stable.
In the second half of the week, however, prices gained noticeable momentum. Robust expectations for US export sales and new harvest estimates from South America had a supportive effect. Conab raised the Brazilian soybean harvest significantly. At the same time, the quality rating in Argentina deteriorated, with the proportion of good or excellent falling noticeably. This development put the volume stability into perspective and gave prices additional support. Soybean meal followed the firm trend.
Canola was volatile in Winnipeg, while rapeseed was stable overall on Euronext. Palm oil continued to fall in Asia, providing a counterweight in the vegetable oil complex. Overall, the soy complex ended the week on a positive note.
ZMP Live Expert Opinion
The market has quickly come to terms with the largely neutral WASDE report and is once again focusing more strongly on South America. Although higher Brazilian production is generally having a negative impact, quality problems in Argentina are providing a counterbalance. The decisive factor remains whether US export momentum picks up. If demand stabilizes, the soy complex could maintain its positive trend. However, without new impetus from China or the currency market, the upside potential is likely to remain limited. In the short term, a volatile sideways movement with a slightly positive bias seems likely.
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