Record Canadian oilseed crushing is putting a dampener on US soymeal prices, the US Department of Agriculture said.
In its March Feed Outlook, the USDA saw the US facing heavy supplies of canola and soymeal from its northern neighbour.
“Margins for domestic soybean processors have been further squeezed by competition from robust imports of soymeal and canola meal, particularly from Canada,” the USDA said.
Falling US crush
The USDA trimmed its forecast for US soybean demand in this month’s Wasde, due to the weak pace of January crushing, down 6.5m bushels month on month.
A reduction 10m bushel cut to the estimate left soybean crushing at 1.87bn bushels, down 3m bushels year on year, the first drop in three years.
“The year-to-year decline is based on greater substitution of domestically produced soybean meal with imported protein meals,” the USDA said.
The USDA upped its forecast for US soymeal and canola meal imports, citing heavy Canadian supplies, and strong dollar.
The Canadian dollar currently trading at around 1.32 to the greenback.
This is weak, by historical standards, although it has recovered 10% from the 12-year low hit in January.
Record Canadian crush
“Canadian processors may set an all-time high for the canola crush this year,” the USDA said.
“As a consequence, US imports of canola meal for October 2015-January 2016 have already surged 13% ahead of the record 2014-15 pace.”
This is adding further pressure to US soymeal prices, the USDA said.
The Canadian farm ministry AAFC last month saw Canadian canola crushing 12% ahead of last year’s pace.
The AAFXC suggested that its forecast for 8.2m tonnes canola crushing, already a record level up 9.8m tonnes year on year, might be in for another revision if the current pace is maintained.
The USDA lowered its forecast for 2015-16 average soymeal prices to $270-$300 a tonne, from $270-$310 forecast last month.
And more Canadian canola supplies may be directed toward the US, as a trade spat with China develops.
China, the biggest importer of Canadian canola, is planning to reduce the allowable proportion of foreign material in shipments to just 1%, from its current level of 2.0-2.5%.
The tighter restrictions on so-called “dockage”, such as straw, weeds, and seed pods, are supposedly aimed at protecting Chinese crops from the fungus blackleg.
But it has been suggested that China is instead seeking to slow imports due to swollen rapeseed oil inventories.
(Source – http://www.agrimoney.com/news/canadian-canola-meal-exports-to-weigh-on-us-soymeal-prices–9414.html)