International markets did a good job to hold at recent levels despite the weaker influence of outside markets (lower equities, energy and metals, and a higher $US), an escalation in harvest pressure and weak demand. Our prices were held in check by the strengthening $A and some light harvest selling.
Despite plentiful nearly supplies and the USDA lifting soybean yield estimates in its latest report, beans continue to provide strength to the entire grains complex.
Although it is difficult to gauge where the strength in the bean pit is coming from, there is growing talk of uncertainty regarding the new South American bean crop going into the ground given recent dryness in Argentina. Although this seems a tad premature, USDA has a big number pegged in for South American bean production as producers swing away from less profitable corn. The fact that crude oil has maintained a $US75-80/bll range for over five weeks may have breathed life into demand from the bio-diesel sector.
ProFarmer Canada called over the weekend and said market strength may have been aided by market chatter that the US corn crop in some areas is struggling with vomitoxin, a fungal by-product that can sicken humans and animals if ingested. The talk weighed on corn amid ideas it would cut demand for animal feed and helped lift other markets like CBOT soymeal (and in turn beans) on ideas that other products could be used as substitutes.
Canola is battling on two fronts; a Chinese ban on Canadian canola imports because of blackleg and restrictions on sales of canola meal into the US because of salmonella fears. As it stands, four out of six COPA (Canadian Oilseed Processors Association) plants in Western Canada are not allowed to ship canola meal to the US. Subsequently, distressed cargoes of Canadian canola meal are being sold into markets offshore.
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