March 8, 2011

Prices of US soy to face further drop on strong yield forecast

Soy prices await risk of further fall on the brink of a potentially huge soy harvest from South America, Emily French, managing director at US-based agri-business consultancy ConsiliAgra, said Monday (Mar 7).

She pegged Argentina soy crop around 49-50 million tonnes, while Brazil crop may reach 69-70 million tonnes.

Analytical firm Informa last week put Argentina soy crop estimates at 52 million tonnes and pegged Brazil's soy crop at 71.4 million tonnes.

"In terms of grains and oilseed fundamentals, it would say to me that the commodity with the greatest downside price risk in the near term would be soybeans," French said.

The huge South American forecasts outweigh concerns about the ongoing port strikes in Argentina and harvest delays in Brazil due to heavy rains.

Brazil and Argentina are the world's second- and third-biggest suppliers of soy, respectively, after the US.

Traders will continue to keep a close watch on the progress of Brazil's soy crop, as "Brazil is the only country where you have land that can be brought into production. Agricultural land in US is relatively capped, as is Argentina. In soybeans market, the greatest influencer of prices remains to be on the supply side," French added.

CBOT May soy futures were down US$0.25 at US$14.14 a bushel at 0611 GMT.