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News Flash: August 21, 2014

INDUSTRY

Indian soyoil and oilseeds futures rise, shrug off weak overseas market

Indian soyoil, soybean and rapeseed futures rose on Wednesday, shrugging off falls in overseas markets where benchmark palm oil futures remained at their lowest levels in more than a year. Malaysian palm oil futures crept down on Wednesday, close to their lowest levels in more than a year, weighed down by projections of bigger-than-expected supplies of rival oilseeds, which could impact demand for the tropical oil.Reuters

 

SOYBEAN

Soybeans Fall to Four-Year Low on Big Pod Tally by Tour

Soybean futures fell to the lowest in almost four years as bankers, analysts and grain buyers trudge through the fields of the Midwestern United States, tallying pods that signal a bumper crop. Reports from the first three days of the annual Pro Farmer Midwest Crop Tour show higher soybean counts in Illinois, Ohio, Indiana, Iowa and South Dakota. Those five states accounted for 47 percent of the nation’s production last year, according to government data. This year’s crop is expected to rise to a record 3.816 billion bushels, the U.S. Department of Agriculture said last week. Soybean futures for November delivery fell 1.4 percent to close at $10.38 a bushel on the Chicago Board of Trade, the biggest drop for a most-active contract since August. 1. Earlier, the price touched $10.35, the lowest since Sept. 16, 2010. The oilseed has declined 20 percent this year.Soybean-oil futures for December delivery rose 0.6 percent to 33.22 cents a pound. Earlier, the price touched 32.76 cents, the lowest since March 31, 2009. The commodity has dropped 15 percent this year.Bloomberg

 

CORN

U.S. Farmers Are Up to Their Ears in Corn

Months of wet weather have fueled expectations for an exceptionally large corn harvest. The U.S. Agriculture Department projected last week that production will exceed 14 billion bushels, topping last year’s historic harvest. Many analysts believe this week’s closely watched Pro Farmer crop tour will offer further evidence of a remarkably healthy crop, and that demand isn’t likely to climb enough to offset the sharp increase in supplies. The drop in corn prices could benefit consumers by curbing inflation in grocery-store products that contain the ingredient, though analysts expect few packaged-food companies to make significant price cuts. Expectations of a glut have driven corn prices down by 13% this year, to near four-year lows. Wall Street Journal

 

PALM

Palm flat near five-year lows as market waits for direction

Malaysian palm oil traded flat, near five-year lows, in thin trading on Tuesday. Market participants waited for a sign on whether prices had bottomed out after the benchmark fell the most since March 2013 last week. Palm typically tracks soyoil, a rival edible oil and common food and fuel substitute. Soy markets are facing pressure over forecasts of a bountiful soybean crop from top exporter, the United States. Reuters

First half of 2014 brings record sales of RSPO Certified Sustainable Palm Oil

Demand for the sustainable oil is rising faster than supply for the first time as total sales of Certified Sustainable Palm Oil (CSPO) reach more than 2.4 million metric tonnes (MT). Total CSPO sales grew by 48.8% reaching 2,478,438 MT while the CSPO production stood at 5,276,064 MT at the end of June 2014.Food Navigator

Palm Oil Seen by UBS Extending Slump on Outlook for Supplies

Palm oil’s retreat is set to deepen with prices extending declines to less than 2,000 ringgit ($630) a metric ton on ample global supplies of edible oils, according to Wayne Gordon, an analyst at UBS AG. Futures have fallen to the lowest level in almost five years. Palm oil tumbled into a bear market last month as favorable weather in the U.S. spurred forecasts for a record crop of soybeans, which can be crushed to provide an alternative oil. Palm also slumped as demand for biofuels missed expectations, forecasts for an El Nino weather pattern, which can disrupt supplies, were scaled back, and the ringgit strengthened.Palm oil dropped 0.5 percent to 2,039 ringgit a ton in Kuala Lumpur today, the lowest close since October 2009. Soybeans fell to $10.35 a bushel in Chicago yesterday, the lowest level since September 2010, while soy oil slumped to 32.76 cents a pound, the lowest since March 2009. Palm oil’s discount to soy oil was at $91.82 a ton today, compared with an average of $244 last year, Bloomberg data reveals. Malaysia’s ringgit climbed 3.4 percent this year, Asia’s strongest performance after Indonesia’s rupiah, as the Southeast Asian country’s economy expanded at the fastest pace in six quarters in the three months to June and current-account data beat estimates. A stronger ringgit makes palm oil purchases more expensive for holders of other currencies. Global ending stockpiles of palm oil will increase 10 percent to 8.7 million tons in 2014-2015, according to a forecast from the USDA. Indonesia and Malaysia account for about 86 percent of the world crop, with the oil crushed from fresh-fruit bunches and harvested year-round. Palm oil may rebound to 2,350 ringgit in 12 months, said Gordon, citing expectations for support from biodiesel demand. Palm oil and other vegetable oils may rebound from current very low levels as the recent slide prompts demand for use in energy and food, researcher Oil World said this week.Bloomberg

 

CANOLA

Canadian Farmers May Harvest Less Wheat and Canola in 2014

According to a new report from Statistics Canada, Canada’s canola harvest will fall 23 percent to 13.9 million tons. Analysts had originally forecast 14.8 million. Growers on the prairies said excessive rains in late June were likely to limit harvests, after flooding prompted local governments in Saskatchewan and Manitoba to declare states of emergency. Canadian farmers see output at “more normal levels” in 2014 after record canola crops last year, Statistics Canada said. The report is “mildly bullish” for canola as there may not be enough supplies to maintain the current level of exports and domestic processing, John Duvenaud, the publisher of Wild Oats Grain Market Advisory, said this week on a conference call. At the same time, any rally in canola prices may be limited by the “landslide” of soybeans expected from the U.S. Output will rise to an all-time high of 3.82 billion bushels this year, the USDA reported last week. “The crops in general are average at best,” said Wayne Palmer, a senior market analyst with Agri-Trend Marketing in Winnipeg. It’s “a total different story this year with crop production.” Farmers collected record supplies of canola in 2013 amid higher average yields. Yields are expected to stay above average in 2014 even after the delayed planting and flooding in parts of the prairies. Canola prices declined 5.7 percent on ICE Futures Canada in Winnipeg. Bloomberg

 

BIOFUEL

U.S. biodiesel industry suffers as biofuel rule delays drag on

The long wait for final 2014 federal biofuel use targets has compounded troubles for U.S. biodiesel producers already hit by the Obama administration’s preliminary plan to slash renewable fuel requirements.Nearly nine months behind schedule, 2014 targets from the Environmental Protection Agency could arrive in September at the earliest. In the meantime, biodiesel producers have been squeezed by falling prices, as refiners and blenders delay purchases until they see a final mandate.Debate about the future of the Renewable Fuel Standard has mostly focused on ethanol. But the smaller biodiesel industry has arguably been hurt more by proposed production cuts.The RFS requires increasing amounts of renewable fuels – including ethanol, produced mostly from corn, and biodiesel, often made from soybeans – to be blended into U.S. gasoline and diesel supplies each year through 2022.The preliminary 2014 rule, announced in November, held the biodiesel target at the 2013 level of 1.28 billion gallons. Producers had asked for a target of 1.7 billion gallons after producing nearly 1.8 billion gallons in 2013, and warned in a letter to President Barack Obama that a lower target would imperil billions of dollars in investments and thousands of jobs.Although the industry is confident it could meet a higher target, the EPA’s delay means producers would have to quickly ramp up production late in 2014.The market is in “disarray,” Pete Moss, president of a biodiesel consulting firm said. “We are fully capable of producing higher numbers, but we really can’t without some guidance.” Without the export market enjoyed by corn ethanol producers, or built-in demand from refiners that use ethanol as a cheap source of octane, some biodiesel makers have already been forced out of business. More could shut if persisting delays leave the industry guessing at the future direction of U.S. policy. Reuters