Caldic logo

January 2019 Markets Update

31 January 2019

January 2019 Markets Update

We are pleased to provide the following commodities update for January, 2019

Soybean/Canola Oil

With the US government shutdown, there are no USDA crop reports.  Therefore, we will focus on 2 things:

South American Crop: 

  • Analysts are reducing their forecasts due to weather in Brazil

Potential US/China Trade Deal:

  • Any deal to remove Chinese tariffs on US soybeans will be bullish to price.

Market Prices Have Rebounded Upwardly Lately

  • As mentioned above, South American crop prospects have been downgraded and news of a potential US/China trade deal have caused prices to rise.
  • Crude oil has been on the rise to start 2019; this increases demand of alternative fuels (biodiesel from soybean oil)
  •  Although South American crop has been downgraded, it should be a sizeable crop.

What Does This Mean?

  • Outlook is muddied
  • So much will depend on whether or not the US and China can make a trade deal
  • Timing of trade deal will impact planting intentions in the spring

Sugar

  • Sugar prices have been on a modest rise to start 2019.
  • Forecast in Brazil has been downgraded due to weather.
  • Production in general has been slowed due to the recent historical pricing lows.
  • Crude oil prices have been rising; creates incentive to shift sugar to ethanol production.
  • Although supply forecasts have been downgraded, we are still going to see a supply surplus this year.  We are not likely to see $0.10/lb sugar anytime soon.  The recommendations is to buy in the low $0.12/lb range.