Corn basis rebounds; Peanut futures rally; Rapeseed record yield

Chart of the Day – China corn basis rebounds recently on firmer cash prices

Peanut futures at 14-mth high on soybean expansions

Prices of peanut futures in China rallied sharply in the past month, jumping nearly 20% to hit the highest level in 14 months.

The most liquid contract for the Zhengzhou-listed futures drifted sideways on Wednesday after the contract touched 10,828 yuan/ton ($1,623/ton) the day before.

The shrinking acreage for peanut planting as Chinese farmers expanded corn and soybean areas combined with weather and yield concerns fuelled bullishness in peanut futures market.

Market analysts echoed the expectation of lower planting area for 2022/23 new crop peanut with crops in northern and northeastern China losing its competitiveness against corn and soybean.

The Chinese government is running a campaign to expand the country oilseed productions in the next five years to achieve an overarching goal of self-sufficiency and food safety.

Local governments in the north are offering greater subsidies to farmers who choose to plant more soybeans rather than other crops.

Meanwhile, weather is another key driver behind the futures rally as peanut planting is currently in progress and it is estimated to finish within the next two weeks.

However, latest weather forecasts indicate heavy rains and lower temperature in most parts of northern China that could damage crops.

Some areas in northeastern China even issued warning of a potential hail.

Hence, strong peanut futures are likely to generate a repercussion across other oilseed markets including soybean and rapeseed.

Rapeseed crop could see record yield this year: state media

China’s 2021/22 new crop rapeseed is on track to have a new record level of yield which could help meet the expectation of a record production this year.

The government set a target to boost the country’s oilseed output this year, including expanding rapeseed acreage and improving yield.

“The latest agricultural survey showed that winter rapeseed crops were sown at a suitable time with high quality and good foundation, along with generally favorable weather conditions, the crop growth is better than last year,” according to state media CCTV.

China’s Ministry of Agriculture and Rural Affairs expects rapeseed production to total nearly 14.5 million tons this year.

Rapeseed crops in China, mainly planted along the Yangtze River  in eastern and central China, are being harvested.