Sluggish sales seen to support soy price

Slow new soy crop sales by Argentine and Brazilian farmers are likely to support soy and soymeal prices in the face of this season's bumper South American soy crop, Hamburg-based oilseeds analysts Oil World said.

"The soy price setback in recent months has made farmers in Argentina and Brazil more reserved sellers," Oil World said. "They are well aware that US old crop supplies are depleted and they can speculate on weather-related production problems in North America this summer."

High crude oil prices have also kept soy production costs high by raising prices for fertilisers and plant protection chemicals, providing another incentive for farmers to hold out for higher soybean prices, it said.

These factors are limiting the downward scope for soy prices and will keep this year's price lows significantly above those seen in previous years with similarly bearish fundamentals.

But the bumper South American soy crop now being harvested is still likely to pressure prices in coming months, it said.

Meanwhile, soymeal prices need to fall to generate demand from the still-ailing global livestock industry, it said. Prices in Hamburg and Rotterdam remain above their five-year average at US$333 a tonne for May delivery on April 12.

"It is doubtful whether the upcoming world supplies will find sufficient demand at this price level," it said. "For the time being, the downtrend in soymeal is obviously being slowed by firmness in soy prices, which in turn are supported by a lack of aggressive selling in South America."