SB planting advances with the lowest level of hectares in 15 years

SB planting advances with the lowest level of hectares in 15 years

Maize and SB planting continues with slower progress than previous years. SB crush showing good signals for export. Net buying positions of maize grows, while SB remains at a minimum.

The week’s rains strongly favored the development of the coarse grain crops. Climatic conditions and soil moisture have been accompanying SB and maize during 2021/22, according to the latest weekly report from the Ministry of Agriculture, Livestock, and Fisheries (MAGyP).

As of December 16^th 2021, a we could see a sowing progress of the oilseed, in relative terms, slightly below previous years with 69% of the area yet to be planted, and reaching a minimum since at least the 2002/03 cycle. Furthermore, if we consider that the total expected sowing area is projected with a downtrend at 16.29 million hectares, the current planted area (11.24 Mil Ha) is the lowest of the last 15 years.

Meanwhile, 2021/22 corn planting is also coming along, although with another outlook of area and production. Maize is currently close to covering 66% of the intended area, which would officially become the second-highest on record. However, just as with the SB crop, the sowing pace has been hindered, on the one hand, due to inadequate levels of soil-moisture, and on the other, with some mild flooding in the Southern Cordoba province and Northwest of Buenos Aires. Other areas have also been suffering scarce water reserves, such as Santa Fe and Entre Rios provinces, likewise impeding a faster planting rate.

Crush Margins showing good signs for exports

With more than 22 Mil MT of accumulated Export Permits (DJVE) of SB by-products 2020/21, exports continue to comfortably surpass the levels of the previous season. However, the current volume of exports is still below the 24.36 Mil MT reached in the 2018/19 cycle.

Yet with very similar crushing levels, we shouldn’t rule out that the current campaign may still exceed the 2015/16 cycle. With more than three months to go until the end of the 2020/21 commercial year, a continued trading surge can be expected, given the high levels of SB processing, hinting the possibility of breaking previous years’ records.

Meanwhile, SBO exports already add up to 4.45 Mil MT, a number clearly below the 4.66 Mil MT on the 2019/20 campaign and sensitively lower than the 4.85 Mil MT in 2018/19. The commercial volume of the oil is also strongly tied to crush levels, so a rebound in exports in the coming weeks shouldn’t be ruled out either.

The 2020/21 soybean accumulates exports of 5.2 Mil MT in its almost 8 months of campaign. This translates to the lowest level of sales since the 2017/18 campaign, which was hit by one of the most severe droughts in recorded history. Regarding export progress of the new campaign, SB 2021/22 has barely accumulated 40,000 tons registered last month, with no new business registered in December.

As for the 2020/21 maize, with export permits at the highest levels in history, the cereal’s export pace is beginning to slow down. Now, attention is progressively turning to the 2021/22 campaign, which continues well on track. With more than 2.3 Mil MT registered so far in December, 15.3 Mil MT of corn has already been declared for export for the new season. This way, the coming campaign has been the second-highest in terms of export at this time of the year, only behind the 18.2 Mil MT at this time of the year for the 2019/20 campaign.

As for the local market, with a good presence of buyers in the last week, maize has seen its prices strengthened for both the nearby corn as well as for the 2021/22 harvest positions. Thus, corn prices have shown nearby prices at around 210 USD/MT, while the May position appeared ​​close to 198 USD/MT on Wednesday.

Additionally, following the trend of external markets, SB has been bearish, falling below 360 USD/MT in the last days, though still above last week’s levels. Meanwhile, May futures traded on MatbaRofex around 322 USD/MT on Thursday, similar to the previous week. In Chicago, prices remained stable with a slight bullish trend for maize, which stood at around 233 USD/MT and an upturn of close to 1% for SB, trading around 470 USD/MT at the close of Thursday.

The net buying position of maize grows while that of SB remains at a minimum

The net buying position of investment funds grew strongly in maize in recent weeks. With net contracts for more than 42 Mil MT at the beginning of December, the investment funds recover the levels of positive positioning that they had until May 2021, which serves as a support for the international prices of corn.

For its part, the net buying position in SB continues to decline and in recent weeks reached levels that had not been recorded since June 2020. Meanwhile, three increases in the US interest rate are expected by the Federal Reserve of the United States (Fed). It seems to be the beginning of the end of the loose monetary policy that has been carried out in the US, a fact that will most likely affect the agricultural commodity markets.

If there is an aggressive context of rate hikes and the withdrawal of expansionary monetary measures (a fact known as tapering), the contracts bought in SB by investment funds could be reduced even more sharply, with its consequent impact, in the same direction, on prices.

For its part, the November monthly report from the National Oilseed Processors Association (NOPA) showed a SB processing of 4.84 Mil MT in the United States for the last month. The soy crush data is below most of the forecasts in this report when some anticipated more than 5 Mil MT processed. With an accumulated 49.67 Mil MT, in 2021 it is above the January-November average of the last five years with 47.58 Mil MT processed, although below the historical record of 2020, which totaled 51.68 Mil MT in the first eleven months of the year.

Source: https://bcr.com.ar/

Photo: REUTERS/Stringer

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