February 2019 Market Update
We are pleased to provide the following commodities update for February, 2019
Soybean/Canola Oil Market Update
We’re seeing a rebound in the soybean oil board:
- Crude oil is continuing its rally since the beginning of 2019 as the demand for biofuel increases.
- Brazil had a very dry January which will likely impact the soybean crop quality.
- Trade talks between US/China have been ongoing, however, they are still no closer to resolution
Canola basis prices are easing:
- StatsCan reported a record canola carryout into 2019.
- Why? Exports to China have slowed considerably and political tensions between Canada and China have escalated due to the arrest of the Huawei CFO.
Upcoming/potential market price drivers:
- Brazil/Argentina to harvest their crop in late Q1/early Q2.
- USDA Prospective Plantings Report – late Q1. There will be a preliminary estimate on upcoming crop supply in North America.
- US/China trade talks???
Despite a rising soybean oil board, net canola oil prices are the lowest we’ve seen in several weeks – not a bad time to make a buy
- Canola’s premium over soybean is shrinking
Sugar Market Update
Sugar prices continue their upward climb since beginning of 2019.
- Brazil’s lack of rain in January has analysts dialing back their supply forecast; cane crushing season starts in April
- Similar to soybean oil, sugarcane can be used in alternative fuel production; the rise in crude oil = increased demand for ethanol = less sugar supply for human consumption = higher prices
- Weather concerns in Brazil caused a flurry of speculative buys in the last couple weeks, driving up prices