Jan 30 / Ignacio Espinola

Market Update

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• China started its Lunar New Year celebration.

• Trump is threatening with more sanctions.

• Argentina reduces export taxes.

• China suspended five Brazilian soy exporters.

Market Update

Current Scenario

China has started its Lunar New Year celebrations and will be out of the market for a week (Year of the Snake). This event will take them out of the market, and therefore we should experience lower volumes, especially in the futures market.

Meanwhile, the biggest question mark for palm oil and soybean oil comes from Donald Trump. He has been threatening with new sanctions on China. On the other hand, the Chinese government has started to receive its citizens living illegally in the United States after President Trump threatened to impose tariffs and sanctions on countries that refuse to accept deportees.

World S&D 

Source: Hedgepoint, USDA

Soybean Oil versus Palm Oil

Source: Reuters

Argentina lowers export taxes

The Argentinean government has decided to lower export taxes until June 2025. The government is trying to encourage a more aggressive export program of Argentinean commodities to take advantage of the current world trade scenario.

They have lowered from to 26% from 33% their Soy export taxes, from 12% to 9.5% their Corn and Wheat taxes and from 31% to 24.5% their Soymeal and Soyoil taxes.

China suspends five Brazilian soy exporters

China has suspended five Brazilian soy exporters because of phytosanitary problems (cargoes did not meet phytosanitary requirements). The suspension could last for 12 months.

The five companies together represent 40% (29.2Mt) of the 73Mt of Brazilian soybeans exported to China in 2024. Over the last 2024, China has been switching its US purchases from US origin to Brazilian origin, reducing its reliance on the US, and has also been building stocks in case of a potential trade conflict with the US.

Funds Activity

Funds have reduced their Soybeans position from negative 49k contracts to 1k long position in two weeks. For Soybean Meal, their position has been stable close to 68k contracts short and for Soybean Oil they have also reduced their short position which was 49k to a 12k short in the last two weeks, which could mean that they are looking at a neutral scenario for soybeans (they are reducing their soybean oil bets and relying on their soybean meal position).

Considering recent weather in South America, with lack of rains over the December and January period, the market is going to pay a lot of attention to the next weeks to see if new rains come to the aid of the Argentinean crop. The last WASDE number was 52M mt production for Soybeans. This number could be reduced in the next report due to the lack of rains.

Until we get some more clarity of the crop conditions, the so-called ‘weather premium’ will be traded in the market. In the meantime, the Trump effect will also play a key role in the next weeks.

Non-Commercials Net Position (Spec) – Soybean 

Source: CFTC

Non-Commercials Net Position (Spec) – Soybean Meal

Source: CFTC

Non-Commercials Net Position (Spec) – Soybean Oil

Source: CFTC

Market Intelligence - Grains & Oilseeds

Written by Ignacio Espinola
Ignacio.Espinola@hedgepointglobal.com
Reviewed by Luiz Roque
Luiz.Roque@hedgepointglobal.com
www.hedgepointglobal.com

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