Screen Heat crack has collapsed and cracks in Asia making new lows yet little effect on flat price. USDA report tonight is adding to uncertainty as large crops tend to grow larger and private forecasters are calling for a 160 MMT crop in Brazil while rumors that Argentina crop maybe as large as 60 MMT. The demand side also does not look that great in China as soybean buyers were not aggressive in latest govt reserve auction. This will now start putting pressure on Soybean oil that is only down 1.45% in last 3 months while soybeans are down 10%. BOGO is trading at +$247/mt down 24% in last three months but 10% of that down move is attributable to the rise in GO. Bids for FOB Paranagua soy oil are -700 in May. Premiums have not moved in Paranagua Soyoil for many weeks while we started the year at -1200. Think we go back there sooner than we think unless futures take a large hit as screen crush margin are relatively ok at $46/mt but in a carry (contango) if you can wait to July where it is trading on screen at $54/mt. These crush margin figures tells us that we will get buried in soy meal and soy oil. Meanwhile, UFOP reported that Germany was the largest EU importer of rapeseed from Eastern Europe as Ukraine with duty exemptions is taking an outsize market-share nearly doubling its exports to Germany. There are no supply issues anywhere so prices must reflect it.
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