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News Flash: October 2, 2014

INDUSTRY

Search is on for rail congestion cure

Significant railroad delays throughout the Upper Midwest are impacting the oilseeds industry; in the region and beyond. Bill Gordon, a soybean farmer, told a joint meeting of five Minnesota legislative committees Tuesday that the state should consider allowing heavier trucks on Minnesota roads and shippers should make more use of Duluth’s harbor to ease the pressure on railroads. More than 40 state legislators attended the meeting to hear about the implications of the continued rail delays. The committees took no action, but bills are expected to be considered to alleviate the problem when the Legislature convenes in January. Twin Cities Pioneer Press

USDA to restart U.S. oilseed crush reports in 2015

The USDA is taking over a series of industrial grain and oilseed reports discontinued in 2011 by the U.S. Census Bureau. However, USDA will not begin publishing data until 2015, a spokesman stated on Monday. The re-launched reports will include statistics for the cotton, fats and oilseeds industries. The reports, discontinued due to Census budget cuts, were closely followed by traders and analysts to gauge monthly consumption of grains and oilseeds. Reuters

India examining industry demand to raise import duty on edible oils: Minister

India is examining industry demand to raise import duty on edible oils, Food Minister Ram Vilas Paswan announced on Saturday, as local oilseed prices have fallen due to a surge in shipments of cheaper palm oil. Higher import duty on vegetable oils could support local oilseed prices and accelerate the crushing of oilseeds such as soybeans and rapeseed. Reuters

Corn Rises From Five-Year Low, Soy Gains on Rain Concerns

Corn futures rebounded from a five-year low and soybeans climbed from the cheapest since 2010 on speculation that rain in the Midwest will delay the harvest in the U.S., the world’s biggest grower of the crops. By midweek, showers will travel east across the Corn Belt, ending Oct. 4, Commodity Weather Group said in a report. Dry weather is expected six to 10 days from today, followed by more rain. Bloomberg

 

SOYBEAN

Soybeans Head for Longest Slump Since 2008 Bumper Crop

Soybean futures are headed for the longest period of monthly losses since 2008 as improving crop conditions bolster the outlook for a record harvest in the U.S. American farmers are expected to harvest an all-time high of 3.913 billion bushels, 19 % larger than last year’s crop, the USDA estimates. Supplies are also rising from Brazil and Argentina, the second- and third-largest producers. Prices fell 11 % in September, heading for a fifth straight monthly decline. Two years after the worst U.S. drought in decades drove futures to a record, the oilseed is slumping as almost ideal weather boosts the outlook for yields. Soybeans in good or excellent condition made up 72 % of the crop as of Sept. 28, up from 71 % as a week earlier, the USDA said. Soybean futures for November delivery fell 1 % to $9.1425 on the Chicago Board of Trade, this week leaving prices down 21 % since June 30. The oilseed touched $9.055 yesterday, the lowest since 2010. Rising production is also driving corn futures lower. The declines are reducing feed expenses for livestock producers and lowering costs for users of soybean oil. Global food prices in August dropped for a fifth month to the lowest since 2010, according to a United Nations index. Hedge funds have held a net-short position in soybeans, betting on a decline in prices, for 11 weeks through Sept. 23, the longest streak since 2006, according to Commodity Futures Trading Commission data. Inventories of the oilseed before the start of next year’s harvest are forecast to more than triple from the prior year to 475 million bushels, the USDA estimates. Corn futures for December delivery dropped 0.4 % to $3.245 a bushel on the CBOT, heading for a fifth monthly decline, the longest streak since July 2013. The grain is down 24 % this quarter. Bloomberg

 

CORN

U.S. Corn Prices Fall to Five-Year Low on Higher-than-Expected Supplies

Corn futures slumped to a fresh five-year low Tuesday after the USDA reported larger-than-expected stockpiles of the grain. Soybean prices also fell. The Agriculture Department, in a closely watched quarterly report, said corn in U.S. storage bins totaled 1.236 billion bushels on September 1, up from just 821 million bushels a year earlier. Corn stockpiles likely topped expectations because demand for feed grains from livestock producers was lower than expected, analysts said. Following a record crop last year, during which U.S. farmers harvested 13.93 billion bushels, U.S. farmers are set to harvest a second bumper crop this autumn, fueling expectations that domestic stockpiles will swamp demand for the grain. Meanwhile, soybean futures settled lower, despite government estimates for lower inventories of the oilseeds than what analysts had expected. Analysts said traders were focused on expectations for a record U.S. soybean crop that would boost stockpiles from current historically low levels. Wall Street Journal

 

PALM

Palm Seen Losing 13% by Godrej’s Mistry on Oils Surplus

Palm oil prices will decline as the world’s most-used edible oil is no longer competitive against alternatives even after dropping to the lowest level since 2009, according to Dorab Mistry, director at Godrej International Ltd. “Palm desperately needs to regain its competitiveness,” Mistry said at a conference in Mumbai this week. Futures must drop to 1,900 ringgit ($580) a metric ton to revive consumption, he said. The oil used in everything from food to biofuels fell 18 % this year as surging supplies from Southeast Asia topped estimates, widening a glut in cooking oils and helping to push global food costs to the lowest level since 2010. Top growers Indonesia and Malaysia announced cuts in export taxes to zero this month to spur sales and restrain the buildup of reserves. Stockpiles will keep expanding because of better-than-expected production before peaking in December. Bloomberg

Palm dips as investors turn cautious on prospect of huge soybean crop

Malaysian palm oil futures dipped on Wednesday and were trapped in a tight range as investors became aware of record supplies of rival oilseeds that could overwhelm global demand and curb appetite for the tropical oil. Palm prices rose 15% in September, their biggest monthly gain since April 2009, lifted by robust export demand and anticipation for output to weaken. But traders said while domestic fundamentals were supportive, the prospects of huge soybean crop in the United States and South America forecast a bleak picture for soy oil prices, which are tracked by palm. Market participants are looking to key industry data next week that will reveal Malaysia’s palm oil end-stocks and production in September. Reuters