Tuesday was a negative day for our markets. Harvest corn closed down 3, harvest soybeans closed down 2, harvest winter wheat closed down 8 3/4 and harvest spring wheat closed down 4. In the overnight trade corn, soybeans and spring wheat are positive with winter wheat still negative. Oil closed up $2.50 yesterday at $69.21 per barrel. It is weaker in trading this morning with it now valued at $68.52 per barrel. With some choppy trading over the last 24 hours our dollar has traded between a low of $0.725 US and a high of $0.727 US. This morning it is currently valued at the low end of the range at $0.725 US.
The soybean complex is currently a story of two different commodities at the opposite end of the price spectrum. Soybean oil continues to be in high demand in the US for both the biodiesel market and the consumer vegetable oil market. It is trading at new highs for the current trading year in the nearby months.
Soybean meal is of course at the other end of the spectrum. With soybean oil demand pushing the crush market to process more soybeans it results in increased supply of soybean meal. This continues to push soybean meal prices lower.
Demand on the world market for soybean meal is being well supplied with Argentina reducing their export taxes on soybean products making them more competitive. We have to remember how Brazil is just coming off a record soybean harvest and they have been a low cost provider of soybeans to the rest of the world.
Of course we have to talk about China and how their actions are impacting prices in the soybean complex. They had record high imports of soybeans in May and the second highest on record for June of this year. Currently they are trying to reduce their hog herd which will result in less internal demand for soybeans and more specifically soybean meal utilised in their hog feed. This week Chinese exporters have sold 150,000 tonnes of soybean oil to India. With the large current supplies in China they have made this sale at a discounted price to what India would have to pay for supplies from South America or other vegetable oil products. The point of this is that China has been a low cost purchaser and when it suits them they can become an exporter also.
Bottom line for the soybean market is that with the current favourable growing conditions in the US and the production this year from South America the supply of the raw product is not in doubt. Demand for soybean oil will drive the US crush market to keep going which will continue to provide less expensive soybean meal to the marketplace. Demand from China is not expected to increase. All in all it is hard to see what will drive soybean prices much higher in the current environment.
If you would like to talk about the markets or price some of your crop for the future or in store, please reach out to us via phone or email to info@northgowergrains.com. Prices quoted herein are for product at our elevator.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
