The soybean markets started the trading week with a severe setback. Contrary to expectations, the USDA raised the US harvest slightly and also surprised with higher inventories. This development had a particularly negative impact against the backdrop of the weakening export balance, even though China has recently repeatedly ordered larger quantities. Brazil remains the focus of the market: while the US estimates 178 million tons, Brazil's agricultural authority Conab lowered its own forecast slightly, while the consulting firm Agroconsult expects a new record level. The contradictory information caused uncertainty, especially as the weather conditions in many growing regions continue to appear favorable. In Argentina, on the other hand, increasing dry spells are weighing on crop valuations. Strong US export figures and an above-average NOPA crush briefly led to a recovery in soybeans, while soybean meal was weaker.
The rapeseed market in Europe was volatile over the course of the week. After initial weakness, a strong impulse from the canola market provided a tailwind. Here, hopes of an easing in the Canadian-Chinese trade conflict boosted prices, even though analysts dampened expectations for the upcoming state visit. Canola fluctuated wildly between gains and losses, which was also reflected on Euronext. Overall, however, the market remained firm enough to stabilize again after the USDA-induced weakness. At the end of the week, rapeseed also benefited from firm prices for vegetable oils, including soybean oil, which was at least partially able to escape the downward pull.
ZMP Live Expert Opinion
The USDA data at the start of the week hit the soybean market hard and exerted bearish pressure over several trading days. US stocks are higher than expected, while the prospect of a bumper Brazilian harvest is dampening sentiment. Nevertheless, demand indicators have recently become more stable: Large export bookings, particularly by China, and a strong processing month in the US are sending bullish signals. Developments in South America, where weather and harvest data continue to diverge widely, remain crucial. In the short term, the market could remain volatile; in the medium to long term, traders will focus more on the actual harvest development in Brazil and Argentina. The talks between Canada and China are also likely to point the way forward for canola.
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