The Good: If there was any doubt that the Chinese demand for corn was going to be strong in the 2021-22 crop year, this week has left no doubt. USDA announced this morning that China had purchased another 1.36 million tonnes, which brings the total purchases for the 2021-22 crop year to 12.5 million tonnes. This is a conservative number as these are the declared new crop sales and a number of importers will likely show up on the next two weekly reports. As you can see from the graph, sales are more than double the next highest year (2012-13). Chinese demand has been strong for other feed grains as well with reported barley purchases from Europe, Ukraine and Canada. China has also booked 621,000 tonnes of sorghum with an additional 570,000 tonnes in the “unknown destinations” category which are likely also Chinese purchases. China is certainly booking record amounts of feed grain as we god into the 2021-22 crop year. This undoubtedly is bullish for global feed grain prices.
The Bad: November canola dropped by C$1.00 per tonne to close at C$733.70 per tonne. This continues the slowly decline in the futures since hitting a high earlier this month. The declining price for new crop canola continues to support crusher margins which dropped to C$150.73 per tonne with today’s close in the canola, soybean meal and soybean oil markets. This is roughly C$90 per tonne higher than last year at this time.
The Ugly: Soybean oil was ugly today as the July contract traded above the 70 cent per pound mark in the overnight session and was beaten down to close at 68.67 U.S. cents. Part of the selling pressure in soybean oil was due to a drop in crude oil prices, which impacts biodiesel use. The strong move in soybean oil over the past six weeks may be running out of steam, which certainly would provide some headwinds for canola. Just a reminder that nearby soybean oil futures hit the highest value on record earlier this month.