Top factors impacting the vegetable and soybean markets

September 23rd, 2013

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Category: FeaturedWebinar, Grains, Oilseeds

Soybeans take a hit(IngredientNews.com) – Everything from drought to foreign currencies is driving today’s current soybean and vegetable oils markets, according to Stephen S. Nicholson, Chief Economist at International Food Products. Nicholson presented his latest alerts on the oils markets during a recent presentation for food manufacturers, food service executives and beverage producers. View here or continue reading for highlights of his presentation.

What factors are driving the market?

Bullish Factors: dry weather, late rains, a late harvest which will force longer lead times to oil buyers, and good demand for the biodiesel set.

Bearish Factors: record soybean and vegetable oil stocks, strong demand, declining currencies in Malaysia and India against the US dollar which makes palm oil more attractive to buyers around the world. Additionally, there has been acreage expansion in parts of South America, with Brazil surpassing the U.S. as the #1 producer of soybeans.

Swing Factors: the global economy, possible FSA revisions on harvested acres – one million acres of prevent plant beans may not be included in the original numbers, so we may see a reduction in numbers.

An Overview of Global Factors

There is strong demand in the world for beans and the world market will continue to buy them. China, in particular, has increased its demand with nearly 65% of the world’s imports. China is increasingly reliant on imports and this reliance will only continue year after year.

In the U.S., however, soybean exports will be down due to large amounts of beans in Brazil and Argentina. Additionally, U.S. beans have not yet been harvested due to the late crop, so we will be seeing tightness for export and for crushing meal and oil.

Currently, world vegetable oil stocks are very high and at record levels. We have plenty of stocks (mainly palm oil) in the world. Do not expect this great demand of vegetable oils to change anytime soon. The Indian Rupee and Malaysian Ringgit are at record lows versus the U.S. dollar, which makes it very expensive for India to buy vegetable oils, causing a bit of drag on demand since they buy only what they must have. This is important because India is the largest vegetable oil exporter in the world.

A Closing Message to Buyers

Focus in on the longer term and do not get caught up in the day to day. The market can easily throw a curveball. Currently, the soybean market is around the $13.50 to $15 range. We are at the bottom of this range and will stay there unless we see a large soybean crop in Oct. or Nov.. Prices are not going to go way up or way down. Do not forget about the cash markets moving around.

To hear Nicholson’s complete presentation about the soybean and vegetable oil market, please listen to the exclusive webinar here.

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