October 22, 2008
Global oilseeds and prices to recover soon
Global oilseeds and edible oil prices may start rising again although the impact of the world financial crisis on demand remains uncertain, said Hamburg-based oilseeds analysts Oil World on Tuesday, 21 October 2008.
Following the steep price losses during the last three weeks, there is a possibility that plummeting prices will soon recover due to seasonal, technical and fundamental factors. Markets are oversold and vulnerable to a technical bounce due to short covering.
US soy production and big rapeseed crops in Europe, Canada and the Commonwealth of Independent states have now been largely discounted in current market prices.
The focus will increasingly be on developments in South America. Oilseed production prospects deteriorated in Brazil, Argentina and Bolivia due to detrimental weather, a shortage of farm credit and unattractive margins.
Farmers worldwide have been reserved in selling their oilseeds in recent weeks as prices fell. Much of it will depend on how long this policy can be pursued in both the northern and southern hemisphere.
Low farmer selling was especially prominent in Argentina. Lack of farmer selling is likely to cut Argentine soy crushings as well as exports of soyoil and meal in the next few weeks.
Meanwhile, Malaysian palm oil production is set to decline below previous year levels in November and December 2008 due to a decline in the yield cycle in the country's plantations. Malaysia is the world's largest palm oil exporter.
World stocks of soyoil and soymeal are also lower than expected after recent cuts in global soy crushings.