The main event that occurred in the world agricultural market was the resumption of U.S. soybean deliveries to China. According to estimates, the country may import up to 8 MMT of American soybeans this season. As of late December, China has already purchased 2.5-2.6 MMT of the commodity sourced from the U.S.
What scenario the market will follow and what needs to be taken into account?
The crop increase in the southern hemisphere is already an accomplished fact. Soybean production in South America will gain 25 MMT (12-13%) that will pressure global prices. The U.S. may cut production, but apparently not by 25 MMT. In view of unprecedented soybean inventories in the U.S., the crisis of overproduction will pull prices down, reports UkrAgroConsult.
Low oilseed prices will slash margins all over the world. The Black Sea region will also lose margins in view of its record crop of oilseeds. Eventually, the reduction of production margins will result in smaller oilseed plantings in MY 2019/20.
In the near future, the government will stop refunding export VAT on vegetable oils