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Sino-US trade negotiations are optimistic, oilseed prices have risen slightly

Release time:2019-03-07 13:36:26

As of the week of January 18, 2019, the global oilseed market price rose slightly, reversing last week's decline, because the Sino-US trade negotiations are optimistic, and international crude oil futures are strengthening. However, China's soybean demand (3377, -37.00, -1.08%) fell sharply. The US government continued to stop the market and it was impossible to know whether China would further purchase US soybeans. Brazil's new beans began to harvest and listed, limiting the upside of oilseed prices.

On Friday, the Chicago Board of Trade (CBOT)'s March 2019 soybean period rose about 6.5 cents from a week ago to close at 916.75 cents a bushel. Barriers for the US Gulf No. 1 yellow soybeans were quoted at 935.75 US cents per bushel, up 5 cents from a week ago. The Europext exchange for the delivery of the rapeseed in February 2019 was closed at €369.75/tonne, up 1.25 euros from a week ago, and the May price was around €372.00/ton. The Intercontinental Exchange (ICE) March rapeseed period rose about 0.9 Canadian dollars a week ago, to close at 484.20 Canadian dollars / ton. The spot price of Argentine soybeans in Shanghe is 348 US dollars / ton, up by 1 US dollar a week ago, FOB price. The price of the soybean contract in March 2019 was reported to be RMB 3,279/ton, up 43 yuan from a week ago. The spot price of Argentine soybean meal (2525, 11.00, 0.44%) in Shanghe was 330.91 US dollars per ton, down 6.17 US dollars from a week ago.

This week, the international crude oil futures market rose, hitting the highest level in two months, because there are reports that in order to end the trade war with the United States, China proposed a plan to import a large number of US goods in the next six years, with a total amount of one trillion US dollars. And by 2024, the US trade deficit with China will be reduced to zero from $323 billion in 2018. On Friday, the light crude oil for March delivery on the New York Futures Exchange crude oil futures market closed at $54.04 per barrel, up 3.3% from a week ago. The ICE exchange Brent crude oil futures closed at $62.70, up 3.6% from a week ago.

This week, the US dollar index rose for the first time in five weeks, closing at 96.37 points, up 0.7% from a week ago, because the euro zone data was weak this week, speculative funds reduced short positions.

Sino-US trade negotiations and China's soybean import demand are the focus of this week's oilseed market. Since the heads of state of China and the United States reached a truce in Argentina in early December, China resumed importing US soybeans. Before the US government closed, China had already purchased at least 5 million tons of soybeans. However, the government has been shut down for nearly 30 days, and the market is unable to know whether China will further purchase US soybeans, which makes traders cautious.

This week, it was reported that in the trade negotiations at the beginning of this month, China proposed to increase imports of US$1 trillion in US products in the next six years in order to reduce the US-China trade deficit to zero by 2024. The US-China trade deficit reached $323 billion last year. US Treasury Secretary Steven Mnuchin proposed to remove tariffs on Chinese products in order to speed up the negotiation process. China and the United States will hold higher-level trade negotiations later this month. This boosts the bullish sentiment of the agricultural products market.

US domestic soybean demand is in good shape. According to a monthly report released by the National Oilseed Processors Association (NOPA) on Tuesday, the soybean crush in December 2018 reached 171.759 million bushels, which is higher than the 170,016 million bushels expected by analysts before the report. This not only hits the highest crush record in history in December, but also the third highest point in a single month. In contrast, the December 2017 crush was 163.635 billion bushels. The crush in November 2018 was 166.59 billion bushels.

According to the export inspection weekly report issued by the US Department of Agriculture, the US soybean export inspection volume for the week ended January 10, 2019 was 1,085,251 tons, last week was 682,029 tons, compared with 1,244,979 tons in the same period last year.

However, China's soybean demand has declined significantly. According to data from the General Administration of Customs of China, China's soybean imports in December 2018 decreased by 40% from the same period of the previous year, the lowest since the same period in December 2011. In addition, the outbreak of African swine fever in China, the demand for soybean meal-based diets is worrying.

In South America, the dry weather in parts of Brazil has prompted a number of institutions to significantly reduce soybean production forecast data. Brazil's agricultural consultancy Céleres this week lowered its forecast for Brazil's soybean production in 2018/19 by nearly 5 million tons to 117.2 million tons, which was damaged by dry weather. However, such a scale of production is still high from a historical perspective, enough to meet domestic and international demand. Analyst Safras & Mercado expects Brazil's soybean production in 2018/19 to be 115.72 million tons, down 6.5 million tons from earlier forecasts, as the weather in southern Brazil continues to dry. After this month's reduction, Brazil's soybean production forecast will be lower than the 2017/18 production of 120.8 million tons. Safras expects Brazil's soybean acreage in 2018/19 to be 36.42 million hectares, up 3.2% from the previous year.

The industry publications in Hamburg, Germany, this week lowered the Brazilian soybean production forecast for 2018/19 to 117.5 million tons, 5.5 million tons lower than the previous month's forecast, and also lower than the previous year's 120.7 million tons. Soybean crops in parts of Parana, Mato Grosso do Sul and Mato Grosso have suffered irreparable damage, as the weather has been exceptionally dry in December and January. The report pointed out that there is a shortage of soil moisture in northern and northeastern Brazil. If the rainfall in January continues to be lower than normal, the soybean crop may suffer further losses.