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Oilseed Highlights

US soybean exports announced this morning, sending oilseeds higher.
- Second best soybean export sales week for the 2022/23 marketing year. China taking a whack of beans at nearly 3 million metric tonnes.
- Soybean sales stronger than last year by 4% now.
Last week of trading before Christmas holidays begin.
- Since Christmas falls on a weekend, the week between Christmas and New Years is shorter and generally much less trade volume.
- US and Canadian Markets Closed on Monday, December 26th
- Canadian canola markets closed on December 27th as well
- This sometimes translates into volatility with less participants in the market.
Oilseeds mixed once again for the past five trading days:
- European Rapeseed futures grinding lower and partially weighing on global rapeseed values in Canada and Australia.
- EU rapeseed futures down $8.50 euro per tonne for the trading week.
- European rapeseed sits just off of its 52 week low. Rapeseed’s 52 week low came in at December 21, 2021 and sits 20 euro per tonne above the 52 week.
  - 300 euro per tonne below its 52 week high set April 27th.
- Canola down $16.70 per tonne for the week, although picking up some of the overnight losses.
- Soybean oil up 1.53% for the week
- Palm oil traded both sides of unchanged for the week. Down 31 ringgits for the past five trading days.
Chinese rapeseed imports in November came in at the highest level since January 2019. Over 400,000 tonnes.
- Numbers just released
- Most of the canola imported was of Canadian origin.
December highlights for USDA WASDE report and Brazil’s CONAB report:
- USDA WASDE came in quite dull. Neutral to slightly bearish in its reporting.
  - United States Soybean and Wheat stocks came in flat, corn increased slightly
  - South American production figures untouched.
  - Global corn stocks dropped 2 mmt, Soybeans increased very slightly by 600,000 tonnes, Wheat dropped by a small 500,000 tonnes.
- Brazil CONAB left most figures untouched
  - Brazil did drop corn production by 600,000 tonnes to 125.8 mmt
  - Brazil essentially left soybean production untouched at 153.5 mmt
United States EPA allowing the blending of Canola going forwards.
South American Weather
- Argentina forecasts released Sunday night showed better rains for the drought struck soybean crops.
- This was part of the early weakness in the week.
- Brazil looking good yet for rains. Good coverage in some key regions forecasted.
- No major concerns yet in Brazil, although there are some dry regions, they are not causing any concern in markets yet. Timely rains will keep the concerns suppressed.
Australian ABARES (Their version of STATS CAN or WASDE was out early December)
- Looking at 2nd largest winter crop on record
- Quality seems to be a concern in many flooded regions.
- Canola production is expected to hit 7.3 million metric tonnes. This is a 4% increase over last years record setting crop as well.
China so far has been the export destination for 75% + of US soybeans
- Markets watching Chinese demand very closely and news from the nation can have a major influence on the commodity market.
- Perceived weakening demand has held a weight on veg oil markets globally for the past few months. Good sales in the past week have helped tame these fears slightly
US soy and soybean oil priced higher than global counterparts. This is USA’s time to shine and get the most crop out the doors as possible as majority South American crop starts to come online in 8 to 12 weeks.
Russia, Ukraine and The United Nations agreed mid November to extend the Grain Corridor for another 120 days.
- This means the export corridor is expected to remain open until mid March 2022.
- Russia and Ukraine generally have most of their grains exported by this time of the year.
- It is in Russia and Ukraine’s best interest to keep the corridor open, especially Russia as they have a record wheat crop to move out of the nation.
Statistics Canada came out December 2nd
- Canola production came in about 1mmt less than average estimates heading into report day.
- See chart’s below. Canola figures for 2021 and some years prior were adjusted recently as well, moving last years production from 12.9 mmt to 13.8 mmt.

Soybean Oil (Green) – European Rapeseed (Purple) – Canola (Black)

Global Vegetable Oil Pricing

USDA WASDE DATA – December 2022

Special Crops

- Indian rabi chickpea crop looks to be back to average levels after a slow start to the season.
- 2022 Kazakhstan Flax crop is estimated below 800,000 tonnes. Up from past two years.
  - This is keeping lid on Canadian flax price potential as cheap Russian and Kazakh flax are abundant in the market.
- European Union Durum exports higher than normal. Import pace lowest in a decade.
- Heavy rainfall during the harvest in eastern Australia has downgraded the Barley crop. Upwards of 60% of the Australian barley crop is grown in the region.
  - Still looking for a big barley crop. 4th largest on record and 13.4 mmt of it, just the quality is being sacrificed.
  - Most of the crop is finding its way into middle eastern markets for the time being
- Flax exports from Russia hit a record 975,000 tonnes in 2021/22
  - Russia has been flooding several markets with Flax this year so far as well and it is hurting North American export prospects.
- Brazilian Sugarcane crop expected to be the smallest since 2011, resulting in a lower supply available for the nations ethanol market.
- European Durum crop is expected to fall to 6.9 mmt, 800,000 tonnes lower than last years production.
- Canadian Durum crop is high quality, over half as a #1.
- Canadian flax exports are slower, larger than expected ending stocks come in. Most since 2017/18
- India has announced Lentils will remain exempt from levy of 10% until March 31^st

South American Crop Production

USDA AMS – GRAIN VESSEL RATES UNITED STATES P.N.W. to japan

Grains

Wheat finally getting a day in the green after some tough recent weeks:
- Kansas City up $0.06 per bushel for the week
- Chicago up $0.03 per bushel
- Minneapolis down $0.02 per bushel
Major cold snap taking place this week across North America.
- Cold temperatures expected to put 20% to 30% of United States winter wheat at risk of severe winterkill this week.
- Majorly cold temperatures all throughout western Canada down to Mexican border and sneaking east into south eastern United States
- To signify the depth of the temperature drop, many regions of northern Florida are expected to freeze overnight throughout the remainder of the week.
EU MARS report out yesterday.
- Winter crops look fairly good. No concerns yet being posted for any winter crop.
- Pocket around north eastern Germany is most at risk heading into spring, this pocket swings into Poland and up into Sweden and Finland
China taking off some COVID restrictions seen as a positive for economic growth.
- China’s most recent wave is predicted to be very severe with upwards of 1 million deaths being forecasted as the nation exits its zero covid strategies.
United States Federal Reserve increased its interest rates once again in its December announcement by 0.50%. Fed signaling that there will be more to come early in 2023 but the severity and frequency of the hikes may drop.
- It will all come down to the almighty Inflation number. Global reserves working to beat the beast of Inflation and their limited tools to do so will be used to full extent.
USDA December WASDE essentially a non event for grains:
- Wheat figures mostly untouched
- Corn global stocks down around 2mmt
Wheat was not friendly to large production numbers out of the Australian ABARES report early December. 36.6 million tonnes of wheat is expected to be harvested of varying qualities.
- This is a record sized production and 1% larger than last years figures.
- 2019/20 production came in at 15.9 mmt although drought year.
Chicago wheat shorts are greatest since pre covid
Russian attacks have been destroying Ukranian infrastructure and it is now anticipated that only half of the exportable crop will actually be exported from Ukraine.
- Massive attacks on rail, ports and electrical infrastructure is putting exports behind pace.
Ukrainian grain shipments facing delays at ports, accusing Russia of playing games with regulatory approvals through the grain corridor.
- Ukrainian grain exports far from operating at full pace
Russia facing logistical issues itself and is having trouble getting grain to port and shipped out.
Statistics Canada published some big wheat numbers in its December report.
- Big 25.7 mmt of spring wheat production, 4th largest in past decade.
- 2013 still takes the cake for largest spring wheat crop at a whopping 27.6 mmt
Argentinian production of wheat coming in at around 10mmt per local sources (USDA 15mmt). Typically they produce a 19 to 20mmt crop. The nation will be quite short on exportable crop given that they keep just over 6mmt domestically.
- Brazil is typically a major importer of 5 to 6 mmt of Argentinian wheat.
- Brazilian production has been increasing in years. Expected at 9.4 mmt vs 7.7 mmt last year and 6.2 mmt year prior.
US winter wheat issues persist. The crop is heading into dormancy in some of the worst shape it has ever been in since record keeping began in mid 1980’s. Major risk of winterkill this week for uncovered crops as well.
- US winter wheat acreage is critical to the overall US wheat crop. Over 70% of US wheat production falls into the winter wheat category, 30% falls into spring wheat and durum (mostly spring wheat)
US Wheat expensive to other global ports of origin. US wheat over $100 per tonne more expensive than worlds cheapest wheat.
Ukraine facing a 30% to 40% drop in its winter wheat acres planted.
- Input Financing, logistical issues and the fact the nation is at war sum up most of the cause for the drop in acres.
Russian crop size is quite large, pushing over the mega 100mmt mark. This is easily be 10mmt to 15mmt over a previous record crop size.
- Winter wheat plantings in the Black Sea lower.
Europe’s 2022 corn crop is expected to be the smallest in 15 years.
Ukrainian wheat production seen falling to 17.4 mmt by private analysts. This is down from roughly 33mmt in the year prior.