The soy complex showed significant upward momentum in this reporting week, driven by surprisingly restrictive USDA figures in the Wasde report and political impetus from Washington. US President Donald Trump's announcement to extend the tariff pause with China by a further 90 days led to strong price gains for soybeans and soybean meal at the start of the week, although market analysts considered the quadrupling of Chinese purchases demanded by Trump to be unrealistic. The USDA forecast of a smaller US soybean harvest of 116.8 million tons despite record-breaking yields of 53.6 bushels per acre (~3.6 t/ha) set further bullish accents over the course of the week. The decisive factor here was the decline in acreage to its lowest level in around twelve years, which heightened concerns about a possible domestic shortage. While global production figures for Brazil and Argentina remained unchanged, lower US ending stock forecasts provided additional support. Canola, on the other hand, came under heavy pressure as China announced an anti-dumping duty of 75.8% on Canadian canola imports, which caused ICE prices to slump by more than 30 Canadian dollars at times and also weighed on the rapeseed market on Euronext. It was not until later in the week that there was a technical countermovement, boosted by a heavily oversold market. Rapeseed on Euronext followed the international environment with moderate gains, but sentiment remains cautious in view of Chinese trade policy and strong South American competition.
ZMP Live Expert Opinion
Soybean prices are currently benefiting from a rare combination of tight US acreage and political easing in the trade dispute with China. In the short term, the bullish sentiment is likely to continue as long as there are no negative production reports from the US growing regions. However, the current high price level could quickly reduce the competitiveness of US exports, especially in view of the strong harvest expectations in South America. The situation for canola remains tense, as the massive Chinese tariff is putting the Canadian export market to a prolonged test. Fluctuations in overseas demand could also cause short-term movement for rapeseed in Paris.
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