Speculative increase in oil prices supports the quotations for rapeseed and soybeans.

Quotations for soybeans and rapeseed, which declined after the USDA report, started to recover yesterday against the backdrop of speculative oil price growth to a 2.5-month high.

September futures for Brent crude oil on the ICE London exchange rose by 6.2% to $81.3 per barrel (+9.8% for the month), and August futures for WTI crude oil on the NYMEX New York exchange increased by 6.9% to $76.8 per barrel (+12%) due to improved macroeconomic indicators in the US, reduced recession risk, and halting of oil production in certain Libyan fields.

The market was supported by an increase in China’s oil imports in June by 4.6% to a 3-year high of 12.72 million barrels per day. However, oil demand in China is gradually decreasing due to a slowing economy. The national corporation CNPC (the largest oil and gas producer in the country) has lowered its crude oil demand forecast for China in 2023 from 756 to 740 million tons compared to the March estimates. Crude oil inventories in the country reached a 2-year high of 966 million barrels in May, surpassing the 5-year average of 858 million barrels by 12.5%.

In June, China reduced its exports of goods by 12.4% compared to June 2022 (against expectations of 10%), marking the largest drop in the last 3 years, and imports decreased by 6.8% (against expectations of 4.1%). This indicates a sharp slowdown in the country’s economy.

According to Vortexa, crude oil inventories on tankers that have been idle for at least a week increased by 5.5% in a week and amounted to 112.07 million barrels as of July 7, although the average storage on tankers is 85-90 million barrels of oil.

On the Chicago exchange, soybean quotations dropped by 2-2.5% based on the USDA report, but yesterday August futures increased by 2.8% to $545.6 per ton, and November futures rose by 3.1% to $503.3 per ton (+2.2% for the week and 10.5% for the month). Traders are conducting speculative purchases, understanding that the soybean harvest in the US will decrease, and prices for the new harvest will reach the level of prices for the old harvest.

On the Winnipeg exchange, November futures for canola increased by 2.1% to 814 CAD per ton or $621 per ton (+7% for the week, +21% for the month).

On the Paris exchange, August futures for rapeseed rose by 2.4% to 473.5 EUR per ton or $532 per ton (+5.7% for the week, +5.8% for the month).

In the July report, USDA experts increased the forecast for global rapeseed production in 2023/24 MY by 0.21 to 87.42 million tons (88.34 million tons last year), including 4 million tons for Ukraine, compensating for the decrease in EU crop by 0.8 to 20.2 million tons due to drought in France and Germany.

On the physical market, the discount relative to November quotations on MATIF increased from -40 EUR/ton to -60 EUR/ton amid increased offers from Ukraine and Eastern Europe. Forecasts for rapeseed production in the EU are decreasing, but prospects for soybean and sunflower crops remain favorable.

In Ukraine, purchase prices for rapeseed increased from $340-350 per ton to $355-360 per ton or 14,000-14,600 UAH per ton with delivery to the Danube ports due to higher global prices and harvesting delays caused by rainfall.

Demand for rapeseed from the EU is very low. Buyers offer 425-430 EUR/ton on DAP Germany only for deliveries in October-November.

An increase in rapeseed supply amid oil price decline can sharply reverse prices downwards, especially in the case of signals of China’s economic slowdown.