Soybean Morning Update & Commentary: Bean oil a beneficiary of trade tariff with Canada.
<div class=\"default-font-wrapper\" style=\"line-height: 1;font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">Overnight grain markets were weaker as we settled into the tariff trade where our largest trade partners are being confronted by tariffs that are being leveraged to force changes in border security and drug enforcement. While the default reaction by our export reliant Ag markets is correctly negative, the unknowns are numerous and we should anticipate plenty of twists and turns - so stay nimble. President Trump is set to meet with Mexico and Canada today and so it is possible (although unlikely?) that an agreement can still be reached to delay or avoid tariffs which are set to take effect tomorrow. March beans traded more than 10 cents lower but fought back off the overnight lows and headed into the morning break, we are trading a penny higher. Strength from soybean oil on the product side is supportive for beans and for the moment, soybean exports have not faced retaliatory tariffs or threats. As it stands today Mexico has 1.3 mmt of US bean commitments on the books, China holds 2.4 mmt, and ‘unknown’ holds another 3.7 mmt. The outside markets feature strength across the energy complex, a firm dollar, and weakness in the equity markets.<br> <br>In the product trade, bean oil is trading 1.30 pts or 2.8% higher as the 25% tariff on Canadian rapeseed is expected to steer a larger share of domestic demand for biofuel feedstock to bean oil. The US was forecast by the USDA to import 3.6 mmt of rapeseed oil in 24/25. Meal gapped to the downside and is trading $4 lower. The oil share spread is at a 2.5 month high. Board crush margins are 4 higher at $1.32/bushel. <br><br>The COT report showed managed fund money through the trade week ending 1/28 had +39.0k corn (net long 350.7k), -18.9k srw (net short 110.7k), -7.2k hrw (net short 42.3k), +16.1k beans (net long 56.4k), +8.9k meal (net short 52.2k), and +15.5k oil (net long 39.7k). <br> <br>In the news:<br><ul class=\"decimal_type\"><li>Brazil’s 24/25 soybean crop is projected at 174 mmt vs. 170.8 mmt in previous estimate according to Celeres.</li><li>AgRural est Brazil's soybean harvest at 9% complete, 1st corn harvest 14%, Safrinha corn planting at 9%.</li><li>Soybean harvest in Mato Grosso, Brazil at 12.2% complete according to state agency IMEA. This is below the 5 yr avg pace of 25.3%. Corn planting (Safrinha) at 6.3% complete down from 5 yr avg pace of 22.2%.</li><li>Brazil farmers have harvested 10.32% of the soybean area vs. 16.72% at this time last year, according to Patria Agronegocios. </li><li>Ahead of today's monthly USDA soy crush report, the average trade estimate is a record-high 217.6 mbs. If realized, it would be up 3.6% from the 210.0 million bushels crushed in November and up 6.6% from the December 2023 crush of 204.3 million bushels. Soyoil stocks as of Dec. 31 were estimated at 1.734 bln lbs, if realized, reflects a 7.5% jump from the prior-month supply that totaled 1.613 billion pounds but a 4.9% decline from the end of December 2023, when stocks totaled 1.824 billion pounds. It would also be the tightest end-of-December oil supply on record dating back to 2015.</li><li>On Monday, trade sources cited by reuters say Iran's state grain buyer set Tuesday, Feb 4th as the offer deadline in a tender seeking up to 60,000 mt of Soymeal. The meal is for shipment between May and June. Origins accepted include only Argentina or Brazil</li><li>Argentina grain & oilseed export chamber estimated January's grain export sector grew 36% from the year earlier month, and rose 5% from December's pace.</li><li>US farmers will face challenges with Canadian potash based fertilizers after the imposition of import tariffs, according to German based K+S. The company ships around 300,000 mt of Canadian fertilizers to the US. Total US potash imports are estimated around 10.00 mln mt per year.</li><li>On Friday, Strategie Grains analysts raised their EU 2025 rapeseed production forecast to 19.0 mln mt, up +300,000 mt over last month's outlook</li><li>On Friday, Strategie Grains analysts raised their EU 2025 soybean production forecast to 3.2 mln mt, up +100,000 mt over last month's outlook</li><li>On Friday, Strategie Grains analysts lowered their EU 2025 sunflower seed production forecast to 10.4 mln mt, off -100,000 mt from last month's outlook</li><li>Strategie Grains analysts attributed mild winter weather so far this season for good crop development, and said a shift to rapeseed will lead to lower sunflower production</li><li>Euronext Paris May rapeseed futures on Monday are trading +3.00 euros higher at 518.50 euros/mt</li><li>Dalian: Chinese new year holiday continues Monday & Tuesday</li><li>Malaysian April crude palm oil futures on Monday traded +84 ringgit higher ending at 4,373 ringgit/mt</li><li>On Monday, Malaysian March cash offers for RBD palm oil and olein traded unchanged at $1,065.00/mt and $1,070.00/mt, respectively</li><li>Outside markets. Crude Oil +$1.88 ; Gold +$2.90 ; Silver -4.5c ; US $ index +88 pts</li></ul> <br>Soybean Basis: <br>Location Spot <br>US Gulf up 3 to +60 <br>Cedar Rapids, IA steady -35h<br>Mankato, MN up 5 to -50h<br>Decatur, IL steady -15h<br>Decatur, IN steady opt price h <br>Columbus, OH steady -20h </div>