The BIG picture, where does rapeseed/meal fit in?
I thought I'd do an occasional piece looking into one specific commodity in detail, whats bullish & whats bearish. For no particular reason I'm going to kick off with rapeseed, then spin off to look at the implications for meal.
BULLISH
The United States Department of Agriculture (USDA) planting intentions report shows that American farmers plan to only plant 1.01 million acres of canola this year. That is a 15% drop from last year’s 1.183 million acres.
While they are off their peak, Canadian canola crush margins are about $13 per tonne better for July canola crushing and almost $10 per tonne more for November canola crushing than at the end of March.
Trade sources say that India is buying up to a million tonnes of palm oil in 100,000 tonnes batches each month. This is supporting world vegetable oil values. Earlier this year India waived import duties on crude palm oil and soybean oil in an effort to fight inflation.
BEARISH
Trade sources say that Pakistan grew a large sunflower crop this year and this will mean that they will not be in to buy canola for the remainder of the crop year.
Oil World says that Australia will plant 1.1 to 1.2 million hectares of canola this year versus 800,000 hectares last year. That should translate into a 1.4 to 1.55 million tonne Aussie canola crop versus 1.1 million tonnes last year. Australian Crop Forecasters sees the 2008-09 Aussie canola crop hitting 1.6 million tonnes.
The German farmers organization, Deutscher Raiffeisenverband is predicting that Germany will harvest about 5.8 million tonnes of rapeseed this year. That is half a million tons up on last year's 5.3mmt.
Coceral is predicting that the European Union 31 will grow almost 18 million tonnes of rapeseed this year. Last year we produced 16.0 million tonnes.
The Canadian Wheat Board is predicting that canola production there will total 10.03 million tonnes next year. That is up a hair over 15% over last year’s 8.71 million tonnes.
Figures out yesterday from CNGOIC peg China's output at 11.5 million tonnes 10.8% up compared to 9.2 million last year.
India's rapeseed output is seen unchanged at around 6.0mmt.
CONCLUSIONS/LETS DO THE SUMS
EU production up 2.0mmt, China up 2.3mmt, Canada up 1.3mmt and Aussie production up around 0.4mmt with India & the US pretty much unchanged. That's around 6mmt more rapeseed in the world pipeline.
With ever increasing crude & veg oil prices crush margins are pretty good, seed supply is going to be pretty good also. So why has meal gone up £20/tonne on old crop and £15/tonne on new crop in the last fortnight?
I can maybe just about see the reasoning on old crop. Downtime is looming, old crop seed stocks are dwindling, the Argy situation is keeping nearby soya tight which may have a knock-on effect for rapemeal demand. The (meal) stock IS there and it's not moving. If anyone buys into this theory then I've got resale offers to back it up if anyone wants any.
I certainly don't get the new-crop situation at all. The crushers are estimated to have only got around 25% sold - I've got the printouts here to prove it (nah, I haven't really, how on earth would I get hold of them?!), yet prices have moved up around £15/tonne.
Let me guess: "we just can't buy the seed."
That old chestnut has been around longer than Norman Wisdom. There's six million tonnes more of it waiting in the wings, whilst you've got silos full of expensively priced meal that isn't shifting being carried into a heavily discounted new-crop market just weeks away.
Am I the only one that can see this or what?
Sit tight. If you can't buy new crop rapemeal cheaper than this when the time comes then I'm Ruud van Nistelrooy.
BULLISH
The United States Department of Agriculture (USDA) planting intentions report shows that American farmers plan to only plant 1.01 million acres of canola this year. That is a 15% drop from last year’s 1.183 million acres.
While they are off their peak, Canadian canola crush margins are about $13 per tonne better for July canola crushing and almost $10 per tonne more for November canola crushing than at the end of March.
Trade sources say that India is buying up to a million tonnes of palm oil in 100,000 tonnes batches each month. This is supporting world vegetable oil values. Earlier this year India waived import duties on crude palm oil and soybean oil in an effort to fight inflation.
BEARISH
Trade sources say that Pakistan grew a large sunflower crop this year and this will mean that they will not be in to buy canola for the remainder of the crop year.
Oil World says that Australia will plant 1.1 to 1.2 million hectares of canola this year versus 800,000 hectares last year. That should translate into a 1.4 to 1.55 million tonne Aussie canola crop versus 1.1 million tonnes last year. Australian Crop Forecasters sees the 2008-09 Aussie canola crop hitting 1.6 million tonnes.
The German farmers organization, Deutscher Raiffeisenverband is predicting that Germany will harvest about 5.8 million tonnes of rapeseed this year. That is half a million tons up on last year's 5.3mmt.
Coceral is predicting that the European Union 31 will grow almost 18 million tonnes of rapeseed this year. Last year we produced 16.0 million tonnes.
The Canadian Wheat Board is predicting that canola production there will total 10.03 million tonnes next year. That is up a hair over 15% over last year’s 8.71 million tonnes.
Figures out yesterday from CNGOIC peg China's output at 11.5 million tonnes 10.8% up compared to 9.2 million last year.
India's rapeseed output is seen unchanged at around 6.0mmt.
CONCLUSIONS/LETS DO THE SUMS
EU production up 2.0mmt, China up 2.3mmt, Canada up 1.3mmt and Aussie production up around 0.4mmt with India & the US pretty much unchanged. That's around 6mmt more rapeseed in the world pipeline.
With ever increasing crude & veg oil prices crush margins are pretty good, seed supply is going to be pretty good also. So why has meal gone up £20/tonne on old crop and £15/tonne on new crop in the last fortnight?
I can maybe just about see the reasoning on old crop. Downtime is looming, old crop seed stocks are dwindling, the Argy situation is keeping nearby soya tight which may have a knock-on effect for rapemeal demand. The (meal) stock IS there and it's not moving. If anyone buys into this theory then I've got resale offers to back it up if anyone wants any.
I certainly don't get the new-crop situation at all. The crushers are estimated to have only got around 25% sold - I've got the printouts here to prove it (nah, I haven't really, how on earth would I get hold of them?!), yet prices have moved up around £15/tonne.
Let me guess: "we just can't buy the seed."
That old chestnut has been around longer than Norman Wisdom. There's six million tonnes more of it waiting in the wings, whilst you've got silos full of expensively priced meal that isn't shifting being carried into a heavily discounted new-crop market just weeks away.
Am I the only one that can see this or what?
Sit tight. If you can't buy new crop rapemeal cheaper than this when the time comes then I'm Ruud van Nistelrooy.
