March 2, 2012

 

US soy prices set five-month record

 

 

Falling global production and rising demand from top importer China has driven US soy prices to its highest in five months on Wednesday (Feb 29), climbing for an eighth straight session.

 

Corn and wheat also registered gains.

 

March soy on the Chicago Board of Trade rose 0.2% to US$13.08 a bushel after peaking at US$13.08-1/2, the highest level for the front month since September 22, 2011.

 

The contract is on track for a monthly gain of more than 9%.

 

"The price for soy this morning has climbed to a 5-month high of more than US$13 a bushel and in February is likely to achieve its highest per-month increase in value since December 2010," Commerzbank said in a market note Wednesday (Feb 29).

 

Global soy output this year is set for a record drop of 7.2%, or 19 million tonnes, mainly due to bad weather conditions in key growing areas in South America, Germany-based analyst Oil World forecast this week.

 

Smaller crops in No. 2 soy exporter Brazil and No. 3 exporter Argentina should push business to the world's biggest shipper, the United States.

 

"We continue to hear stories that tightness is forecast to continue in the oilseeds market," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.

 

Soy crushers in China, the world's top buyer of the oilseed, have increased output in recent weeks because of improved crushing margins, which should boost soy imports, an official think-tank said Wednesday (Feb 29).

 

China, which imports roughly two-thirds of the world's soy, bought the second-largest amount of US soy ever last week. Dealers also noted crop concerns in China.

 

"The north-east of China, where a quarter of the country's grain is grown, is currently experiencing its driest winter for 62 years, which could also jeopardise this year's soy harvest in this region," Commerzbank said.

 

The rise in soy prices could prompt US farmers to increased plantings this year at the expense of corn.

 

"The ratio between soy and corn prices is turning in favour of soy as it gets closer to 2.3, while it was at 2 in December," analyst Agritel said in a market note.

/SPAN