“Despite 2013-14’s record-breaking oilseed production, satisfying demand has been challenging, leading to the price lift seen in recent months,” Amandeep Kaur Purewal, market specialist at the U.K.’s HGCA, wrote in a recent roundup of the market situation. “While tightness in old crop U.S. soybean supplies have provided support to oilseed prices, the outlook for the 2014 soybean crop is fundamentally bearish, with the USDA planting intentions report suggesting that a record area of 33 million hectares will be sown for harvest 2014.”

Whether or not a record U.S. soybean crop is realized for 2014-15 ultimately depends on how much is actually planted and, as usual, on weather conditions, Purewal said.

“In Brazil, although planting of the 2014-15 soybean crop will not begin until November, the rate of area expansion is predicted to slow down,” she said. “Prospects of higher input costs and forward soybean prices being pulled down by a potential record U.S. soybean area in 2014-15 may curb the clamor to grow the oilseed.”

She also highlighted the possible development of an El Nino weather event, “which typically brings drier weather to Southeast Asia, could have a negative impact on palm oil production and, thus, may introduce a bullish element to the market.”

“However, if prices rise too steeply, relative to other vegetable oils, then demand switching is to be expected, as observed recently,” she said.

According to the International Grains Council (IGC), global soybean production is forecast to rise by 4% year on year in 2013-14, to an all-time high of 282 million tonnes.

“However, the total is cut by some 2 million tonnes from previously to reflect the impact of recent adverse weather in South America, notably in Brazil, on yield potential and harvesting,” it said in its Grain Market Report at the end of March.

The IGC put global soybean consumption in 2013-14 at a record 281 million tonnes, “driven by strong demand from crushers, particularly in China and Brazil.”

The figure is up 5% year on year. Global soybean trade is forecast to rise by 11% year on year to a record 107.4 million tonnes in 2013-14 (October through September).

“The expansion will be underpinned by a projected 15% y/y increase in shipments to China, which is set to account for almost 70% of world trade, fuelled by strong demand from oilseed processors,” the IGC said. “A recent outbreak of avian influenza in China’s southern Guangdong Province during February and March reportedly resulted in reduced demand for soybean meal from the poultry sector, with buyers looking to re-sell up to 1 million tonnes of purchases from South America, primarily Brazil, to the U.S.”

The IGC is also forecasting record 2013-14 rapeseed production, at 70.8 million tonnes, an 11% rise from the previous year.

“With harvests complete in many major growing regions, world output was boosted by bumper crops in the northern hemisphere, as near-perfect conditions led to record yields in several key producing countries, including Canada, China, Ukraine and Russia,” it said. “Global production is projected at 68.5 million tonnes in 2014-15, down 3% on this season’s record output.”

“World rapeseed/canola use is forecast at a record 68 million tonnes in 2013-14, up 6% y/y, with the crush projected to reach 65 million (61.4 million previous year),” it said.

The latest Oil Crops Outlook, from the USDA’s Economic Research Service, noted that lower yields meant a reduced production estimate for Brazil.

“Global soybean production for 2013-14 is forecast 1.4 million tonnes lower this month to 284 million,” it said. “Reductions for Brazil and India more than offset an increase for Uruguay.

“The 2013-14 soybean harvest in Brazil is nearing completion,” the report, dated 11 April, said. “By the end of March, 73% of soybeans were harvested. Based on lower expected yields this month, USDA reduced its soybean production forecast for Brazil by 1 million tonnes to 87.5 million. Excessive harvest-time rains raised yield losses in Mato Grosso, while dry weather stunted soybean development in southern and southeastern Brazil.”

However, the 2013-14 soybean area in Brazil was estimated 400,000 hectares higher this month to 29.9 million, it said.

“Long growing seasons in Brazil allow planting of a second crop in February or once the first crop of soybeans is harvested,” it said. “This year, an unprecedentedly high area was sown to second-crop soybeans — particularly in Mato Grosso and Parana.

“Poor prices this year for a second crop of corn — the usual choice — led some farmers to view a second soybean crop as a marginally better option.”

It also noted that Brazil’s smaller crop and recent cancellations of export sales triggered a reduction in USDA’s forecast of 2013-14 Brazil soybean exports by 500,000 tonnes to 44.5 million, a figure which would still be an all-time high.