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Argentine Soyoil Prices at New Highs on Global Tight Oilseed Supply

25 Feb 2021 7:27 am
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Mumbai (Commodities Control) - Soybean oil prices in Argentina have surged to fresh multi-year highs on Wednesday boosted by concerns on tight supplies of US soybeans, a slow Brazilian bean harvest, tight volumes of sunoil in Ukraine, and limited availability of rapeseed in Canada.

Soyoil volumes for April shipments from the world’s largest soybean oil exporter were valued at 0.10 ct/lb under the May CBOT contract, equivalent to $1,106.50/mt FOB Up River.

That is up over $100/mt in just a week and is higher than a seven-year high of $1,100/mt FOB set in early January when a month-long strike paralysed the local crushing industry.

Surge in Canadian canola futures to a record high on Tuesday added fuel to the bull run on the rest of the oilseed complex, with CBOT futures continuing to surge to fresh highs on Wednesday.

The April CBOT soybean oil contract was up for its fifth session on Wednesday at 49.21 ct/lb – up over 12% since the start of February and at its highest since June 2013, while the March contract was trading over the 50 ct/lb mark.

Basis premiums for Argentine soyoil over the CBOT, meanwhile, have stayed mostly unchanged over the past week, despite the rally on the futures as soyoil volumes remain in short supply in the world’s number one exporter.

While crushing activities have rebounded to a five-year high in January following a record low grind in December caused by the strikes, Argentina remains well behind its bean crushing pace compared to previous years.

Over the past quarter, Argentina processed just under 7 million mt of soybeans, official data from the Argentine government shows, its smallest pace since 2013 and nearly 1 million mt less than what was crushed over the same three-month period last year.

That means roughly 200,000 mt, or around 2% of annual global soyoil exports, did not arrive on the market.

Meanwhile, demand from India – Argentina’s largest customer and the world’s number one vegoil importer – has dried up as prices surged.

Argentine brokers note that demand from India is “zero” as the import margins there fell to negative $40/mt.

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