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February 2019 Market Update

01 March 2019

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

Rains in Brazil to normalize in February/March – hopefully this will improve prospects in time for harvest in April