The onset of the coronavirus has created uncertainty in world oilseeds markets in recent weeks, sending palm oil sharply lower, while also putting a question mark over the Chinese soya purchases promised in that country’s recent trade deal with the US.
David Whyte, trader at United Oilseeds, told Agritrade News that the potential effect of restrictions triggered by the coronavirus was resulting in increasing uncertainty.
“The soya market in the US seems to be under pressure for the seed but the actual oil is still quite well supported because US farmers are not selling,” he continued. “If you look at South America they have improved their infrastructure, putting a little bit more tarmac down on some of the roads that used to be mud.”
“This means they are getting their soya beans a little bit more efficiently to the port, for cheaper freight rates,” he explained. “They are able to export a bit more readily and maybe a bit more competitively which will possibly mean that the US farmer, if he does sell, will have to accept a slightly lower value at some stage. That is probably a little way down the road yet.”
In Europe, the February MATIF had come off the board. “Quite a lot of tenders were put through which means there is rather a large heap of rapeseed in Rotterdam waiting to be crushed, which is causing a little bit of indigestion in the system,” Mr Whyte said. Plant closures have helped to slow movement. “That has conspired to take a deal of value out of the market over the last few weeks.”
However, there has been a recovery. “We have seen, over the last two or three days, the market ease back up five or six euros but then currency is slightly stronger as well, so that is negating some of the benefits that we are able to offer on the farm.
“It’s a little bit messy at the moment,” he commented. “The volatility is going to be with us, the extent depending on whether the virus infection worsens or eases over the coming months. Palm oil values have taken a hit, with emerging transport infrastructure problems in China – basically they have shut a lot of places down.
“You’ve got vessels arriving that cannot discharge because there is no transport infrastructure to get the stuff from the port to its destination,” he concluded. “There are all sorts of shenanigans going on over there at the moment as people try to get their heads round what they are going to do.”
AHDB Cereals and Oilseeds pointed out on Tuesday that China has made no significant purchases of US soya beans since the signing of the much anticipated ‘phase-one’ trade agreement. “US soyabean futures (nearby) have fallen $19.01/ton since the signing of the deal on 15 Jan to 03 Feb,” it said, noting that the Paris rapeseed contract had followed the fall.