March 14, 2012

US soy export outlook advancing over suffering competitors

Oil World said on Tuesday (Mar 13) that US soy export prospects are improving as rival South American producers suffer crop losses and demand from key importer China is likely to continue to grow.

Drought has reduced Brazil's soy crop by 9% in the past three months and Argentina's harvest by 11%, the USDA said on Friday (Mar 9), with the cuts larger than traders had expected.

"The hopes of consumers for (downward price) pressure from the start of South American new-crop marketing were disappointed in recent weeks, now forcing them to seek coverage in a rising market," Oil World said.

"Export demand for US soy suffered a severe setback in the first half of the season owing to the unusually large South American tail-end exports. But the severe crop losses in the southern hemisphere have clearly brightened the demand prospects for US exporters."

Demand from China, the world's largest soy buyer, is also expected to rise, it said. There is concern about lack of water in China's own soy growing regions. There is also talk that China will this year transfer more land from soy to corn cultivation as part of government policy to achieve grains self-sufficiency and improve efficiency of land use, it said.

"China is seen increasing purchases of soy this year backed by the strong domestic oil and meal demand," it said.