January 26, 2011

Argentine rain to dampen soy prices

Argentina's dehydrated soy crop has been improved from its widespread rain, and soy prices are expected to cool in the near future after their recent strength, Oil World analysts said on Tuesday (Jan 25).

"Excellent rain in Argentina has stopped the price rise in the soy complex," it said. "It is possible that prices of soy and products (will) move sideways or slightly lower in the near term," the Hamburg-based oilseeds analysts from Oil World said.

Argentina had widespread rain last week following a prolonged dry period, which helped most but not all soy production regions in the key soy exporting country.

US soy futures rose to a 30-month high in January partly because of Chinese demand and crop concerns in Argentina.

"Soy production prospects have clearly improved," Oil World said. "The bearish effects are however partly moderated by the fact that planting intentions could not be carried out."

But rains came too late to help Argentina's 2011 corn crop, which is likely to fall to around 19 million tonnes from 22.7 million tonnes last year, Oil World said.

Brazil's 2011 soy crop prospects are better compared with Argentina due to more favourable weather and some observers have raised their forecasts to 68.7 million tonnes, unchanged on last year, it said.

"This is a bit premature but cannot be ruled out," it said.