The world is seemingly producing more oilseeds every year. At least for the last six years, the upward trend in oilseed production has been in place, and the United States Department of Agriculture are forecasting yet another record in 2024-25.
The year on year changes in wheat and corn world production were relatively small, at 1.3% and -0.7% respectively. For oilseeds the USDA World Agricultural Supply and Demand Estimates Report pegged production 4% higher than 2023-24.
Figure 1 shows the oilseed production increasing every year for the last six years. Since 2009-10, which was a record year at the time, oilseed production has increased a massive 69%. Figure 1 also shows that while ending stocks have been increasing, it is only marginal. Almost all of the increase in oilseed production has been consumed by an insatiable market.
Over half of the expected 29mmt increase in oilseed production for 2024-25 is expected to come from Brazilian soybeans, with an increase of 10% or 15mmt. Much of the remaining increase is forecast to come from the USA, where soybean production is forecast to be up 7%, or 8mmt to be on the cusp of a new record (figure 2).
The increases in Brazil and the US are massive when you consider that record total canola production in Australia in 22-23 was 8.27mmt.
While canola and rapeseed production in general, and Australian canola production in particular, is a small drop in the ocean of oilseeds, our prices are heavily influenced by what is happening in the soybean and oilseed complex.
Figure 3 shows US soybean futures, along with MATIF (French) Rapeseed and ICE (Canadian) Canola futures. Since coming back into line with soybeans as canola and rapeseed shortage were alleviated in 2022 canola values have largely tracked soybeans.
The increase in the oilseed forecast was largely factored into market before the WASDE was released. As such price didn’t move far with the larger forecast supplies.
What does it mean?
Current soybean and canola futures prices are historically strong, despite the larger supplies forecasted.
Australian canola is still seemingly cheap compared to international values, and with production issues arising in WA, SA and parts of Victoria, we could see local values rally independently of any movement in the global oilseed complex.
Key Points
- Global oilseed production is forecast to hit another record in 2024-25.
- Increased soybean production in the US and Brazil is expected to boost global supplies.
- Markets had largely factored in increases in oilseed supplies.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: USDA, CME, MATIF, ICE, Mecardo
