Soya support to allow further rapeseed gains? Grain Market Daily

• UK feed wheat futures continues to recover, Nov-19 up another pound yesterday to close at £139.00/t.
• Support for grain markets has come as US stocks of maize were below market expectations, with Chicago maize futures (Dec-19) jumping $6.50/t yesterday.
• Oilseed markets have also received support from stock levels being below market expectations (read more below).

The underlying oilseed complex has been showing signs of support, allowing further upward potential for rapeseed markets. Support for soyabeans is currently being provided by three factors:

Stocks

Record stock levels in the US following the trade dispute with China have weighed on the oilseed market. However, in Mondays USDA stock report, US soybean stocks were below market expectations.

At 24.8Mt, stocks of US soyabeans are certainly at record levels, yet well below the 26.7Mt expected in a pre-report trade poll. Additionally, at 24.8Mt on the 1 September, this is well below the previous USDA WASDE US ending stocks forecast of 27.36Mt.

China begins meaningful purchases once more

As well as below market expectations for stock levels, China have returned to buying US soyabeans as part of a tariff-free quota ahead of trade talks.

So far during September, net sales of 982Kt of new crop soyabeans to the US have been confirmed by the USDA, with reports of further buying as part of a ‘good will’ temporary removal of tariffs.

Delayed development

Following the very wet spring, planting of soyabeans was delayed, which has in turn impacted development.

At just 55% of the US crop dropping leaves, this is over 20 percentage points behind average, with key states such as Illinois even further behind.

With development over 20 percentage points behind, harvest has too been delayed. With just 7% of the crop harvested as at September 29, well below the 20% average.

With development and harvest falling behind, further questions over yield will be raised, potentially further reducing the volume of soyabeans in the US for 2019/20. As such, ending stock forecasts may well be revised downward in the next USDA WASDE report.

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